Preview
FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM INDEX NO. E2024006259
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024
MONROE COUNTY CLERK’S OFFICE THIS IS NOT A BILL. THIS IS YOUR RECEIPT.
Receipt # 3820736
Book Page CIVIL
Return To: No. Pages: 15
JEFFREY MICHAEL PARRELLA
14 Wall Street Instrument: EXHIBIT(S)
20th Floor
New York, NY 10005 Control #: 202404111746
Index #: E2024006259
Date: 04/11/2024
MILLSTONE FUNDING, INC. Time: 4:26:13 PM
M&R LOGISTICS LLC
SMITH, MICHAEL
Total Fees Paid: $0.00
Employee:
State of New York
MONROE COUNTY CLERK’S OFFICE
WARNING – THIS SHEET CONSTITUTES THE CLERKS
ENDORSEMENT, REQUIRED BY SECTION 317-a(5) &
SECTION 319 OF THE REAL PROPERTY LAW OF THE
STATE OF NEW YORK. DO NOT DETACH OR REMOVE.
JAMIE ROMEO
MONROE COUNTY CLERK
202404111746 Index #
INDEX : E2024006259
NO. E2024006259
FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024
1
MILLSTONE FUNDING INC.
FUTURE RECEIVABLES SALE AND PURCHASE AGREEMENT
This Future Receivables Sale and Purchase Agreement (this “Agreement”) dated as of __________________________________
June 22, 2023
, is
made by and between Millstone Funding, Inc., a New York corporation (“Millstone”), and the merchant which name,
address and other pertinent information appear below (the "Merchant”):
Legal Business Name: _____________________________________________________________________________________________________________
M&R LOGISTICS LLC
D/B/A: _____________________________________________________________________________________________________________
M&R LOGISTICS LLC
Type of Entity: _____________________________________________________________________________________________________________
LLC
Business Physical Address: _______________________________________________________________________________________________________
201 Dakota StreetCenterville, SD 57014
Business Mailing Address: ______________________________________________________________________________________________________
628 16th Ave SEAlbany, OR 97322
Business Phone Number: ___________________________________________
(541) 570-3646
Email: ___________________________________________
msmithtrucking@gmail.com
Banking Information:
Bank Name: ___________________________________________________
Bank of America
Bank ABA: _______________________________________________________
121-000-358
Bank Account Holder’s Name: ___________________________________________________________________________________________________
M&R LOGISTICS LLC
Account # _______________________________________________
325128658912
EIN: ____________________________________________
81-1711440
WHEREAS, the Merchant is desirous to sell to Millstone, and Millstone is desirous to purchase from Merchant, a Specified
Percentage of the Merchant’s Future Receipts, but only on the terms and conditions set forth in this Agreement (all
capitalized terms shall have the meanings ascribed to them below).
NOW, THEREFORE, for good and valuable consideration, the mutual receipts and sufficiency of which is hereby
acknowledged by both parties, Millstone and Merchant 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 Millstone paid the Purchase Price to Merchant.
b. “Specified Percentage” shall mean _______________
Three
PERCENT (_____.00%)
3 of each and every sum from sale
made by Merchant.
c. “Future Receipts” shall mean, collectively, all of Merchant’s receipts of monies paid and delivered to Merchant
by Merchant’s customers’ and/or other vendees 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, ACH or other
electronic transfer or any other form of monetary payment in the ordinary course of Merchant’s business.
d. “Purchased Amount” shall mean the total amount of the Specified Percentage of the Future Receipts that
Merchant shall be under obligation to deliver to Millstone pursuant to this Agreement. The parties agree that
the Purchased Amount shall be $_______________________________________.
72,000.00
e. “Purchase Price” shall mean the total amount that Millstone agrees to pay for the Future Purchased Receipts.
The parties agree that the Purchase Price shall be $_____________________________________________.
50,000.00
f. “Daily Installment” shall mean the fixed amount that Merchant and Millstone agree to be a good faith
approximation of the Specified Percentage of Merchant’s daily Future Receipts. Merchant and Millstone
further agree that, based upon the information provided by Merchant to Millstone concerning Merchant’s most
recent accounts receivables, and subject to Merchant’s right of adjustment/reconciliation set forth in this
Agreement, as of the Effective Date the Daily Installment shall be $____________________________________
450
.
g. “Workday” shall mean Monday through Friday except on days when banking institutions are closed for the
holidays and do not process ACH payments.
2. The Term. The term of this Agreement shall commence on the Effective Date and expire on the date when the
Purchased Amount is received by Millstone in full.
3. Sale of Purchased Future Receipts. Merchant hereby sells, assigns, transfers and conveys (hereinafter, the “Sale”)
unto Millstone all of Merchant’s right, title and interest in to the Specified Percentage of the Future Receipts until the
Purchased Amount shall have been delivered by Merchant to Millstone (the “Purchased Future Receipts”); to have and
hold the same unto Millstone, its successors and assigns, forever. This Sale of the Purchased Future Receipts is made
without express or implied warranty to Millstone of collectability of the Purchased Future Receipts by Millstone and
without recourse against Merchant except as specifically set forth in this Agreement. By virtue of this Agreement,
Merchant transfers to Millstone full and complete ownership of the Purchased Future Receipts and Merchant retains
no legal or equitable interest therein.
4. Payment of Purchase Price. In consideration of the sale by Merchant to Millstone of the Purchased Future Receipts
pursuant to Millstone agrees to pay to Merchant the Purchase Price; the Purchase Price shall be turned over and
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delivered to Merchant immediately after the Effective Date of this Agreement.
Use of Purchase Price. Merchant hereby acknowledges that it fully understands that: (i) Millstone’s ability to collect
the Purchased Amount (or any portion thereof) is contingent upon Merchant’s continued operation of its business and
successful generation of the Future Receipts until the Purchased Amount is delivered to Millstone in full; (ii) that in the
event of decreased efficiency or total failure of Merchant’s business Millstone’s receipt of the full or any portion of the
Purchased Amount may be delayed indefinitely. Based upon the forgoing, Merchant agrees to use the Purchase Price
exclusively for the benefit and advancement of Merchant’s business operations and for no other purpose.
Daily Installments of Purchased Amount. The Purchased Amount of the Specified Percentage of Future Receipts
shall be delivered to Millstone daily on Workdays in Daily Installments.
Approved Bank Account and Credit Card Processor. During the term of this Agreement, Merchant shall: (i) deposit
all Future Receipts into one (and only one) bank account which bank account shall be acceptable and preapproved by
Millstone (the “Approved Bank Account”), (ii) use one (and only one) credit card processor which processor shall be
acceptable and preapproved by Millstone (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 Merchant during the term of this Agreement, prior to the first date of such
unavailability or cessation of services, Merchant shall arrange for another Approved Bank Account or Approved
Processor, as the case may be.
Authorization to Debit Approved Bank Account. a ya i ill i i ia l i
i a i a Daily all a ay il ill
i ll a a all ill i all a a
y i i i a i ai a a y ai l
Fees Associated with Debiting Approved Bank Account. It shall be Merchant’s exclusive responsibility to pay to its
banking institution and/or Millstone’s banking institution directly (or to compensate Millstone, in case it is charged) all
fees, charges and expenses incurred by either Merchant or Millstone due to rejected electronic checks or ACH debit
attempts, overdrafts or rejections by Merchant’s banking institution of the transactions contemplated by this
Agreement.
Merchant’s Right for Reconciliation. Merchant and Millstone each acknowledges and agrees that:
a If any time during the term of this Agreement Merchant will experience sporadic increase or decrease in its
daily receipts, Merchant 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 Merchant’s actual daily receipts for one full
calendar month immediately preceding the day when such request for reconciliation is received by Millstone
(each such calendar month, a “Reconciliation Month”).
Such reconciliation (the “Reconciliation”) of the Merchant’s daily receipts for a Reconciliation Month shall be
performed by Millstone within five (5) Workdays following its receipt of the Merchant’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 Millstone from the Approved Bank Account during the Reconciliation Month at
issue equal the Specific Percentage of the Future Receipts that Merchant collected during the Reconciliation
Month at issue.
One or more Reconciliation procedures performed by Millstone may reduce the effective Daily Installment
amount during the Reconciliation Month in comparison to the one set forth in Section 1 of this Agreement, and,
as the result of such reduction, the term of this Agreement during which Millstone will be debiting the
Approved Bank Account may extend substantially.
Request for Reconciliation Procedure.
a It shall be Merchant’s sole responsibility and the right hereunder to initiate Reconciliation of Merchant’s actual
receipts during any Reconciliation Month by sending a request for reconciliation to Millstone.
Any such request for Reconciliation of the Merchant’s daily receipts for a specific Reconciliation Month shall be
in writing, shall include a copy of Merchant’s bank statement and a credit card processing statement for the
Reconciliation Month at issue, and shall be received by Millstone via email to admin@millstonefunding.com,
with the subject line “REQUEST FOR RECONICILIATION,” within five (5) Workdays after the last day of the
Reconciliation Month at issue (time being of the essence as to the last day of the period during which such
demand for reconciliation shall be received by Millstone).
Millstone’s receipt of Merchant’s request for Reconciliation after the expiration of the 5-Workday period
following the last day of the Reconciliation Month for which such reconciliation is requested nullifies and
makes obsolete Merchant’s request for Reconciliation for that specific Reconciliation Month.
Merchant shall have the right to request Reconciliation as many times during the term of this Agreement as it
deems proper, and Millstone shall comply with such request, provided that:
i Each such request is made in accordance with the terms of this Section 11.
ii If a request for Reconciliation is made after the expiration of the term of this Agreement and, as the
result of such Reconciliation, the total amount actually debited by Millstone from the Approved Bank
Account will become less than the Purchased Amount, then and such event the term of this Agreement
shall automatically be extended until the time when the total amount actually debited from Approved
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Bank Account pursuant to this Agreement shall become equal to the Purchased Amount.
iii. In the event after the last day of the term of this Agreement Merchant will determine in good faith that
the actual amount debited by Millstone from the Approved Bank Account pursuant to this Agreement
is greater than the Purchased Amount, then and in such event Merchant shall have the right to request
final Reconciliation within five (5) Workdays following the expiration date of the term of this
Agreement (time being of the essence) and Millstone shall honor such request within five (5)
Workdays following the day of its receipt of such request.
e. Nothing set forth in Sections 10 or 11 of this Agreement shall be deemed to provide Merchant with the right to
interfere with Millstone’s right and ability to debit the Approved Bank Account while the request for
Reconciliation of Merchant’s receipts is pending or until the Purchased Amount is collected by Millstone in full.
12. Adjustment of Daily Installment. Merchant and Millstone each acknowledge and agree that:
a. If any time during the term of this Agreement Merchant will experience steady increase or decrease in its daily
receipts, Merchant 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 Daily Installment that Merchant
is obligated to delivery daily to Millstone in accordance with the provisions of Section 6 above. Such
Adjustment shall become effective as of the date it is granted and the new adjusted amount of the Daily
Installment (the “Adjusted Daily Installment”) shall replace and supersede the amount of the Daily Installment
set forth in Section 1 above.
b. The Adjustment of the Daily Installment shall be performed by Millstone within five (5) Workdays following its
receipt of the Merchant’s request for Adjustment by modifying daily amounts that shall be are debited from
the Approved Bank Account until the Purchased Amount is paid in full. Notwithstanding anything to the
contrary set forth in Sections 12 and 13 hereof, no Adjustment shall take place until and unless Reconciliation
for at least one (1) Reconciliation Month takes place resulting in reduction of the total amount debited from
Merchant’s Approved Bank Account during the Reconciliation Month by at least 15% in comparison to the
amount that would have been debited during that month without Reconciliation.
c. One or more Adjustments performed by Millstone may substantially extend the term of this Agreement.
13. Request for Adjustment Procedure.
a. It shall be Merchant’s sole responsibility and the right to initiate the Adjustment by sending a request for
Adjustment to Millstone.
b. A request for Adjustment (an “Adjustment Request”) shall be in writing, shall include copies of: (i) Merchant’s
three (3) consecutive bank statements of the Approved Bank Account and credit card processing statements
immediately preceding the date of Millstone’s receipt of the Adjustment Request, and (ii) Merchant’s bank
statements and credit card processing statements previously provided by Merchant to Millstone based upon
which statements the amount of Daily Installment set forth in Section 1 above (or the then current Adjusted
Daily Installment, as the case may be) was determined, and shall be received by Millstone by email at
admin@millstonefunding.com, with the subject line “REQUEST FOR ADJUSTMENT,” within five (5) Workdays
after the date that is the latest of the last day of the latest bank statement enclosed with the Adjustment
Request and the last date of the latest card processing statement enclosed with the Adjustment Request (time
being of the essence as to the last day of the period during which an Adjustment Request shall be received by
Millstone).
c. Millstone’s receipt of a Merchant’s Adjustment Request after the expiration of the above referenced 5-
Workday period nullifies and makes obsolete such Adjustment Request.
d. Merchant shall have the right to request Adjustment of the Daily Installments as many times during the term of
this Agreement as it seems proper, and Millstone shall comply with such request, provided that:
i. Each such request for Adjustment is made in accordance with the terms of this Section 13.
ii. A request for Adjustment shall not be made after the expiration of the term of this Agreement.
e. Nothing set forth in Sections 12 or 13 of this Agreement shall be deemed to provide Merchant with the right to
interfere with Millstone’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 Millstone in full.
14. Risk Sharing Acknowledgments and Arrangements.
a. Merchant and Millstone each hereby acknowledges and agrees that:
i. The Purchased Future Receipts represent a portion of Merchant’s Future Receipts.
ii. This Agreement consummates the sale of the Purchased Future Receipts at a discount, not borrowing
funds by Merchant from Millstone. Millstone does not charge Merchant and will not collect from
Merchant any interest on the monies spent on the purchase of the Purchased Future Receipts. The
period of time that it will take Millstone to collect the Purchased Amount is not fixed, is unknown to
both parties as of the Effective Date of this Agreement and will depend on the how well or not well
Merchant’s business will be performing following the Effective Date. As an extreme example, in the
event Merchant’s business ceases to exist after Millstone’s purchase of the Purchased Future Receipts
for reason outside Merchant’s control, Millstone may never recover any moneys spent on such
purchase.
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iii. The amount of the Daily Installment set forth in Section 1 of this Agreement is calculated based upon
the information concerning an average amount of daily receipts collected by Merchant’s business
immediately prior to the Effective Date of this Agreement which information was provided by
Merchant to Millstone.
iv. The amounts of Merchant’s future daily receipts may increase or decrease over time.
v. If, based upon the Reconciliation and/or the Adjustment procedures described above, it will be
determined that the actual daily amounts of the Specified Percentage of the Future Receipts get
reduced in comparison to the amount of the Daily Installment as of the Effective Date set forth in
Section 1 of this Agreement, and in comparison to the amount that both Merchant and Millstone may
have anticipated or projected because Seller’s business has slowed down, or if the full Purchased
Amount is not remitted because Merchant’s business went bankrupt or otherwise ceased operations
in the ordinary course of business (but not due to Merchant’s willful or negligent mishandling of its
business), and Merchant shall have not breached this Agreement, Merchant would not owe anything
to Millstone and would not be in breach of or in default under this Agreement.
b. Millstone’s Risk Acknowledgments. Millstone agrees to purchase the Purchased Future Receipts knowing
the risks that Merchant’s business may slow down or fail, and Millstone assumes these risks based exclusively
upon the information provided to it by Merchant and related to the business operations of Merchant’ business
prior to the date hereof and upon Merchant’s representations, warranties and covenants in this Agreement
that are designed to give Millstone a reasonable and fair opportunity to receive the benefit of its bargain.
Furthermore, Millstone hereby acknowledges and agrees that Merchant shall be excused from performing its
obligations under this Agreement in the event Merchant’s business ceases its operations exclusively due to the
following reasons (collectively, the “Valid Excuses”):
i. adverse business conditions that occurred for reasons outside Merchant’s control and not due
to Merchant’s willful or negligent mishandling of its business;
ii. loss of the premises where the business operates (but not due to Merchant’s violation of its
obligations to its landlord);
iii. bankruptcy of Merchant;
iv. natural disasters or similar occurrences beyond Merchant’s control.
c. Not a Loan. Merchant and Millstone agree that the Purchase Price is paid to Merchant in consideration for the
ownership of the Purchased Future Receipts and that payment of the Purchase Price by Millstone is not
intended to be, nor shall it be construed as a loan from Millstone to Merchant that requires absolute and
unconditional repayment on a maturity date. To the contrary, Millstone’s ability to receive the Purchased
Amount pursuant to this Agreement, and the date when the Purchased Amount is paid in full (if ever) are
subject to and conditioned upon performance of Merchant’s business. If, nevertheless, a court having
jurisdiction over this Agreement and the parties hereto shall have determined that Merchant received a loan
from Millstone, and Millstone has charged or received interest hereunder in excess of the highest rate allowed
by law, then the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by
applicable law and Millstone shall promptly refund to Merchant any interest received by Millstone in excess of
the maximum lawful rate.
REPRESENTATIONS, WARRANTIES AND COVENANTS
15. Merchant represents, warrants and covenants that as of this date and during the term of this Agreement:
a. Financial Condition and Financial Information. Merchant’s bank and financial statements, copies of which
have been furnished to Millstone, and future statements which may be furnished hereafter pursuant to this
Agreement or upon Millstone’s request, fairly represent the financial condition of Merchant as of the dates
such statements are issues, and prior to execution of the Agreement there has been no material adverse
changes, financial or otherwise, in such condition, operation or ownership of Merchant. Merchant has a
continuing, affirmative obligation to advise Millstone of any material adverse change in its financial condition,
operation or ownership. Millstone may request statements at any time during the term of this Agreement and
Merchant shall provide them to Millstone within 5 business days. Merchant’s failure to do so is a material
breach of this Agreement.
b. Governmental Approvals. Merchant 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. Merchant 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. Merchant 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
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or violation of, or default under, any agreement or instrument by which Merchant is bound or any statute, rule,
regulation, order or other law to which Merchant is subject, nor require the obtaining of any consent, approval,
permit or license from any governmental authority having jurisdiction over Merchant. All organizational and
other proceedings required to be taken by Merchant to authorize the execution, delivery and performance of
this Agreement have been taken. The person signing this Agreement on behalf of Merchant has full power and
authority to bind Merchant to perform its obligations under this Agreement.
e. Accounting Records and Tax Returns. Merchant will treat receipt of the Purchase Price 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 Millstone is entitled to audit Merchant’s accounting records upon reasonable Notice in
order to verify compliance. Merchant hereby waives any rights of privacy, confidentiality or taxpayer privilege
in any litigation or arbitration arising out of this Agreement in which Merchant asserts that this transaction is
anything other than a sale of future receipts.
f. Taxes; Workers Compensation Insurance. Merchant will promptly pay, when due, all taxes, including
without limitation, income, employment, sales and use taxes, imposed upon Merchant’s business by law, and
will maintain workers compensation insurance required by applicable governmental authorities.
g. Business Insurance. Merchant will maintain general liability and business-interruption insurance naming
Millstone as loss payee and additional insured in the amounts and against risks as are satisfactory to Millstone
and shall provide Millstone proof of such insurance upon request.
h. Electronic Check Processing Agreement. Merchant shall not change its processor, add terminals, change its
financial institution or bank account(s) or take any other action that could have any adverse effect upon
Merchant’s obligations or impede Millstone’s rights under this Agreement, without Millstone’s prior written
consent.
i. No Diversion of Future Receipts. Merchant shall not allow any event to occur that would cause a diversion
of any portion of Merchant’s Future receipts from the Approved Bank Account without first notifying Millstone
of such diversion.
j. Change of Name or Location. Merchant shall not conduct Merchant’s businesses under any name other than
as disclosed to the Processor and Millstone and will not change any of its places of business without first
obtaining Millstone’s written consent.
k. Prohibited Business Transactions: Merchant shall not: (i) transfer or sell all or substantially all of its assets
(including without limitation the Collateral or any portion thereof) without first obtaining Millstone’s consent;
or (ii) make or send notice of its intended bulk sale or transfer.
l. No Closing of Business. Merchant 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 Millstone, and (ii) providing
Millstone with a written agreement of a purchaser or transferee of Merchant’s business or assets assuming all
of Merchant’s obligations under this Agreement pursuant to documentation satisfactory to Millstone.
Merchant represents that it has no current plans to close its business either temporarily (for renovations,
repairs or any other purpose), or permanently. Merchant agrees that until Millstone shall have received all of
the Purchased Amount, Merchant will not voluntarily close its business on a permanent or temporarily basis
for renovations, repairs, or any other purposes. Notwithstanding the foregoing, Merchant shall have the right
to close its business temporarily if such closing is necessitated by a requirement to conduct renovations or
repairs imposed upon Merchant’s business by legal authorities having jurisdiction over Merchant’s business
(such as from a health department or fire department, or if such closing is necessitated by circumstances
outside Merchant’s reasonable control. Prior to any such temporary closure of its business, Merchant shall
provide Millstone ten (10) business days advance notice.
m. No Pending Bankruptcy. As of the date of Merchant’s execution of this Agreement, Merchant is not insolvent,
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
Merchant. Merchant represents that it has not consulted with a bankruptcy attorney on the issue of filing
bankruptcy within six months immediately preceding the date of this Agreement.
n. Estoppel Certificate. Merchant will at any time, and from time to time, upon at least one (1) day’s prior notice
from Millstone to Merchant, execute, acknowledge and deliver to Millstone and/or to any other person or
entity specified by Millstone in its notice, 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. Working Capital Funding. Merchant shall not further encumber the Future Receipts, without first obtaining
written consent of Millstone.
p. Unencumbered Future Receipts. Merchant 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.
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q. Business Purpose. Merchant 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. Merchant’s execution of and/or performance of its
obligations under this Agreement will not cause or create an event of default by Merchant under any contract,
which Merchant is or may become a party to.
s. Right of Access. In order to ensure Merchant’s compliance with the terms of this Agreement, Merchant hereby
grants Millstone the right to enter, without notice, the premises of Merchant’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 Merchant’s daily receipts to the Processor and to ensure that Merchant
has not violated any other provision of this Agreement. Furthermore, Merchant hereby grants Millstone and
its employees and consultants access to Merchant’s employees and records and all other items of property
located at the Merchant’s place of business during the term of this Agreement. Merchant hereby agrees to
provide Millstone, upon request, all and any information concerning Merchant’s business operations, banking
relationships, names and contact information of Merchant’s suppliers, vendors and landlord(s), to allow
Millstone to interview any of those parties.
t. Phone Recordings and Contact. Merchant agrees that any call between Merchant and Millstone and its
owners, managers, employees and agents may be recorded and/or monitored. Furthermore, Merchant
acknowledges and agrees that: (i) it has an established business relationship with Millstone, its managers,
employees and agents (collectively, the “Millstone Parties”) and that Merchant may be contacted by any of the
Millstone Parties from time-to-time regarding Merchant’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) that any such contact may be made by any of the Millstone Parties in
person or at any phone number (including mobile phone number), email addresses, or facsimile number
belonging to Merchant’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 Merchant with respect to this Agreement have such knowledge, experience and
skill in financial 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, Merchant entering into this Agreement.
v. Merchant’s Due Diligence. The person authorized to sign this Agreement on behalf of Merchant: (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 Millstone.
w. Arm-Length Transaction. The person signing this Agreement of behalf of Merchant: (a) has read and fully
understands content of this Agreement; (b) has consulted to the extent he/she wished with Merchant’s own
counsel in connection with the entering into this Agreement; (c) he or she has made sufficient investigation
and inquiry to determine whether this Agreement is fair and reasonable to Merchant, and whether this
Agreement adequately reflects his or her understanding of its terms.
x. Millstone’s Consent. Merchant agrees that in every instance Merchant’s rights under this Agreement are
contingent upon first obtaining Millstone’s consent, such consent may be withheld, granted or conditioned at
Millstone’s sole and absolute discretion.
y. No Reliance on Oral Representations. This Agreement contains the entire agreement between Merchant
and Millstone with respect to the subject matter of this Agreement, and supersedes each course of conduct
previously pursued or acquiesced in, and each oral agreement and representation previously made, by
Millstone or any of the Millstone Parties with respect thereto (If any), whether or not relied or acted upon. No
course of performance or other conduct subsequently pursued or acquiesced in, and no oral agreement or
representation subsequently made, by the Millstone 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
Merchant’s obligations pursuant to this Agreement or any rights and remedies of the parties to this
Agreement.
PLEDGE OF SECURITY
16. Pledge. As security for the prompt and complete payment and performance of any and all liabilities, obligations,
covenants or agreements of Merchant under this Agreement, now or hereafter arising from, out of or relating to this
Agreement, whether direct, indirect, contingent or otherwise (hereinafter referred to collectively as the “Obligations”),
Merchant hereby pledges, assigns and hypothecates to Millstone and grants to Millstone a continuing, perfected and
first priority lien upon and security interest in, to and under all of Merchant’s right, title and interest in and to the
following (collectively, the “Collateral”), whether now existing or hereafter from time to time acquired:
a. all accounts, including without limitation, all deposit accounts, accounts-receivable, and other receivables,
Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ]
202404111746 IndexNO.
INDEX #: E2024006259
E2024006259
FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024
7
chattel paper, documents, equipment, general intangibles, instruments, and inventory, as those terms are
defined by Article 9 of the Uniform Commercial Code (the “UCC”), now or hereafter owned or acquired by
Merchant; and
b. all Merchant’s proceeds, as that term is defined by Article 9 of the UCC.
17. Termination of Pledge. Upon the payment and performance by Merchant in full of the Obligations, the security
interest in the Collateral pursuant to this Pledge shall automatically terminate without any further act of either party
Preview
FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM INDEX NO. E2024006259 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 MONROE COUNTY CLERK’S OFFICE THIS IS NOT A BILL. THIS IS YOUR RECEIPT. Receipt # 3820736 Book Page CIVIL Return To: No. Pages: 15 JEFFREY MICHAEL PARRELLA 14 Wall Street Instrument: EXHIBIT(S) 20th Floor New York, NY 10005 Control #: 202404111746 Index #: E2024006259 Date: 04/11/2024 MILLSTONE FUNDING, INC. Time: 4:26:13 PM M&R LOGISTICS LLC SMITH, MICHAEL Total Fees Paid: $0.00 Employee: State of New York MONROE COUNTY CLERK’S OFFICE WARNING – THIS SHEET CONSTITUTES THE CLERKS ENDORSEMENT, REQUIRED BY SECTION 317-a(5) & SECTION 319 OF THE REAL PROPERTY LAW OF THE STATE OF NEW YORK. DO NOT DETACH OR REMOVE. JAMIE ROMEO MONROE COUNTY CLERK 202404111746 Index # INDEX : E2024006259 NO. E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 1 MILLSTONE FUNDING INC. FUTURE RECEIVABLES SALE AND PURCHASE AGREEMENT This Future Receivables Sale and Purchase Agreement (this “Agreement”) dated as of __________________________________ June 22, 2023 , is made by and between Millstone Funding, Inc., a New York corporation (“Millstone”), and the merchant which name, address and other pertinent information appear below (the "Merchant”): Legal Business Name: _____________________________________________________________________________________________________________ M&R LOGISTICS LLC D/B/A: _____________________________________________________________________________________________________________ M&R LOGISTICS LLC Type of Entity: _____________________________________________________________________________________________________________ LLC Business Physical Address: _______________________________________________________________________________________________________ 201 Dakota StreetCenterville, SD 57014 Business Mailing Address: ______________________________________________________________________________________________________ 628 16th Ave SEAlbany, OR 97322 Business Phone Number: ___________________________________________ (541) 570-3646 Email: ___________________________________________ msmithtrucking@gmail.com Banking Information: Bank Name: ___________________________________________________ Bank of America Bank ABA: _______________________________________________________ 121-000-358 Bank Account Holder’s Name: ___________________________________________________________________________________________________ M&R LOGISTICS LLC Account # _______________________________________________ 325128658912 EIN: ____________________________________________ 81-1711440 WHEREAS, the Merchant is desirous to sell to Millstone, and Millstone is desirous to purchase from Merchant, a Specified Percentage of the Merchant’s Future Receipts, but only on the terms and conditions set forth in this Agreement (all capitalized terms shall have the meanings ascribed to them below). NOW, THEREFORE, for good and valuable consideration, the mutual receipts and sufficiency of which is hereby acknowledged by both parties, Millstone and Merchant 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 Millstone paid the Purchase Price to Merchant. b. “Specified Percentage” shall mean _______________ Three PERCENT (_____.00%) 3 of each and every sum from sale made by Merchant. c. “Future Receipts” shall mean, collectively, all of Merchant’s receipts of monies paid and delivered to Merchant by Merchant’s customers’ and/or other vendees 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, ACH or other electronic transfer or any other form of monetary payment in the ordinary course of Merchant’s business. d. “Purchased Amount” shall mean the total amount of the Specified Percentage of the Future Receipts that Merchant shall be under obligation to deliver to Millstone pursuant to this Agreement. The parties agree that the Purchased Amount shall be $_______________________________________. 72,000.00 e. “Purchase Price” shall mean the total amount that Millstone agrees to pay for the Future Purchased Receipts. The parties agree that the Purchase Price shall be $_____________________________________________. 50,000.00 f. “Daily Installment” shall mean the fixed amount that Merchant and Millstone agree to be a good faith approximation of the Specified Percentage of Merchant’s daily Future Receipts. Merchant and Millstone further agree that, based upon the information provided by Merchant to Millstone concerning Merchant’s most recent accounts receivables, and subject to Merchant’s right of adjustment/reconciliation set forth in this Agreement, as of the Effective Date the Daily Installment shall be $____________________________________ 450 . g. “Workday” shall mean Monday through Friday except on days when banking institutions are closed for the holidays and do not process ACH payments. 2. The Term. The term of this Agreement shall commence on the Effective Date and expire on the date when the Purchased Amount is received by Millstone in full. 3. Sale of Purchased Future Receipts. Merchant hereby sells, assigns, transfers and conveys (hereinafter, the “Sale”) unto Millstone all of Merchant’s right, title and interest in to the Specified Percentage of the Future Receipts until the Purchased Amount shall have been delivered by Merchant to Millstone (the “Purchased Future Receipts”); to have and hold the same unto Millstone, its successors and assigns, forever. This Sale of the Purchased Future Receipts is made without express or implied warranty to Millstone of collectability of the Purchased Future Receipts by Millstone and without recourse against Merchant except as specifically set forth in this Agreement. By virtue of this Agreement, Merchant transfers to Millstone full and complete ownership of the Purchased Future Receipts and Merchant retains no legal or equitable interest therein. 4. Payment of Purchase Price. In consideration of the sale by Merchant to Millstone of the Purchased Future Receipts pursuant to Millstone agrees to pay to Merchant the Purchase Price; the Purchase Price shall be turned over and Guarantor #1: [ ] Guarantor #2: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 2 delivered to Merchant immediately after the Effective Date of this Agreement. Use of Purchase Price. Merchant hereby acknowledges that it fully understands that: (i) Millstone’s ability to collect the Purchased Amount (or any portion thereof) is contingent upon Merchant’s continued operation of its business and successful generation of the Future Receipts until the Purchased Amount is delivered to Millstone in full; (ii) that in the event of decreased efficiency or total failure of Merchant’s business Millstone’s receipt of the full or any portion of the Purchased Amount may be delayed indefinitely. Based upon the forgoing, Merchant agrees to use the Purchase Price exclusively for the benefit and advancement of Merchant’s business operations and for no other purpose. Daily Installments of Purchased Amount. The Purchased Amount of the Specified Percentage of Future Receipts shall be delivered to Millstone daily on Workdays in Daily Installments. Approved Bank Account and Credit Card Processor. During the term of this Agreement, Merchant shall: (i) deposit all Future Receipts into one (and only one) bank account which bank account shall be acceptable and preapproved by Millstone (the “Approved Bank Account”), (ii) use one (and only one) credit card processor which processor shall be acceptable and preapproved by Millstone (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 Merchant during the term of this Agreement, prior to the first date of such unavailability or cessation of services, Merchant shall arrange for another Approved Bank Account or Approved Processor, as the case may be. Authorization to Debit Approved Bank Account. a ya i ill i i ia l i i a i a Daily all a ay il ill i ll a a all ill i all a a y i i i a i ai a a y ai l Fees Associated with Debiting Approved Bank Account. It shall be Merchant’s exclusive responsibility to pay to its banking institution and/or Millstone’s banking institution directly (or to compensate Millstone, in case it is charged) all fees, charges and expenses incurred by either Merchant or Millstone due to rejected electronic checks or ACH debit attempts, overdrafts or rejections by Merchant’s banking institution of the transactions contemplated by this Agreement. Merchant’s Right for Reconciliation. Merchant and Millstone each acknowledges and agrees that: a If any time during the term of this Agreement Merchant will experience sporadic increase or decrease in its daily receipts, Merchant 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 Merchant’s actual daily receipts for one full calendar month immediately preceding the day when such request for reconciliation is received by Millstone (each such calendar month, a “Reconciliation Month”). Such reconciliation (the “Reconciliation”) of the Merchant’s daily receipts for a Reconciliation Month shall be performed by Millstone within five (5) Workdays following its receipt of the Merchant’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 Millstone from the Approved Bank Account during the Reconciliation Month at issue equal the Specific Percentage of the Future Receipts that Merchant collected during the Reconciliation Month at issue. One or more Reconciliation procedures performed by Millstone may reduce the effective Daily Installment amount during the Reconciliation Month in comparison to the one set forth in Section 1 of this Agreement, and, as the result of such reduction, the term of this Agreement during which Millstone will be debiting the Approved Bank Account may extend substantially. Request for Reconciliation Procedure. a It shall be Merchant’s sole responsibility and the right hereunder to initiate Reconciliation of Merchant’s actual receipts during any Reconciliation Month by sending a request for reconciliation to Millstone. Any such request for Reconciliation of the Merchant’s daily receipts for a specific Reconciliation Month shall be in writing, shall include a copy of Merchant’s bank statement and a credit card processing statement for the Reconciliation Month at issue, and shall be received by Millstone via email to admin@millstonefunding.com, with the subject line “REQUEST FOR RECONICILIATION,” within five (5) Workdays after the last day of the Reconciliation Month at issue (time being of the essence as to the last day of the period during which such demand for reconciliation shall be received by Millstone). Millstone’s receipt of Merchant’s request for Reconciliation after the expiration of the 5-Workday period following the last day of the Reconciliation Month for which such reconciliation is requested nullifies and makes obsolete Merchant’s request for Reconciliation for that specific Reconciliation Month. Merchant shall have the right to request Reconciliation as many times during the term of this Agreement as it deems proper, and Millstone shall comply with such request, provided that: i Each such request is made in accordance with the terms of this Section 11. ii If a request for Reconciliation is made after the expiration of the term of this Agreement and, as the result of such Reconciliation, the total amount actually debited by Millstone from the Approved Bank Account will become less than the Purchased Amount, then and such event the term of this Agreement shall automatically be extended until the time when the total amount actually debited from Approved Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 3 Bank Account pursuant to this Agreement shall become equal to the Purchased Amount. iii. In the event after the last day of the term of this Agreement Merchant will determine in good faith that the actual amount debited by Millstone from the Approved Bank Account pursuant to this Agreement is greater than the Purchased Amount, then and in such event Merchant shall have the right to request final Reconciliation within five (5) Workdays following the expiration date of the term of this Agreement (time being of the essence) and Millstone shall honor such request within five (5) Workdays following the day of its receipt of such request. e. Nothing set forth in Sections 10 or 11 of this Agreement shall be deemed to provide Merchant with the right to interfere with Millstone’s right and ability to debit the Approved Bank Account while the request for Reconciliation of Merchant’s receipts is pending or until the Purchased Amount is collected by Millstone in full. 12. Adjustment of Daily Installment. Merchant and Millstone each acknowledge and agree that: a. If any time during the term of this Agreement Merchant will experience steady increase or decrease in its daily receipts, Merchant 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 Daily Installment that Merchant is obligated to delivery daily to Millstone in accordance with the provisions of Section 6 above. Such Adjustment shall become effective as of the date it is granted and the new adjusted amount of the Daily Installment (the “Adjusted Daily Installment”) shall replace and supersede the amount of the Daily Installment set forth in Section 1 above. b. The Adjustment of the Daily Installment shall be performed by Millstone within five (5) Workdays following its receipt of the Merchant’s request for Adjustment by modifying daily amounts that shall be are debited from the Approved Bank Account until the Purchased Amount is paid in full. Notwithstanding anything to the contrary set forth in Sections 12 and 13 hereof, no Adjustment shall take place until and unless Reconciliation for at least one (1) Reconciliation Month takes place resulting in reduction of the total amount debited from Merchant’s Approved Bank Account during the Reconciliation Month by at least 15% in comparison to the amount that would have been debited during that month without Reconciliation. c. One or more Adjustments performed by Millstone may substantially extend the term of this Agreement. 13. Request for Adjustment Procedure. a. It shall be Merchant’s sole responsibility and the right to initiate the Adjustment by sending a request for Adjustment to Millstone. b. A request for Adjustment (an “Adjustment Request”) shall be in writing, shall include copies of: (i) Merchant’s three (3) consecutive bank statements of the Approved Bank Account and credit card processing statements immediately preceding the date of Millstone’s receipt of the Adjustment Request, and (ii) Merchant’s bank statements and credit card processing statements previously provided by Merchant to Millstone based upon which statements the amount of Daily Installment set forth in Section 1 above (or the then current Adjusted Daily Installment, as the case may be) was determined, and shall be received by Millstone by email at admin@millstonefunding.com, with the subject line “REQUEST FOR ADJUSTMENT,” within five (5) Workdays after the date that is the latest of the last day of the latest bank statement enclosed with the Adjustment Request and the last date of the latest card processing statement enclosed with the Adjustment Request (time being of the essence as to the last day of the period during which an Adjustment Request shall be received by Millstone). c. Millstone’s receipt of a Merchant’s Adjustment Request after the expiration of the above referenced 5- Workday period nullifies and makes obsolete such Adjustment Request. d. Merchant shall have the right to request Adjustment of the Daily Installments as many times during the term of this Agreement as it seems proper, and Millstone shall comply with such request, provided that: i. Each such request for Adjustment is made in accordance with the terms of this Section 13. ii. A request for Adjustment shall not be made after the expiration of the term of this Agreement. e. Nothing set forth in Sections 12 or 13 of this Agreement shall be deemed to provide Merchant with the right to interfere with Millstone’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 Millstone in full. 14. Risk Sharing Acknowledgments and Arrangements. a. Merchant and Millstone each hereby acknowledges and agrees that: i. The Purchased Future Receipts represent a portion of Merchant’s Future Receipts. ii. This Agreement consummates the sale of the Purchased Future Receipts at a discount, not borrowing funds by Merchant from Millstone. Millstone does not charge Merchant and will not collect from Merchant any interest on the monies spent on the purchase of the Purchased Future Receipts. The period of time that it will take Millstone to collect the Purchased Amount is not fixed, is unknown to both parties as of the Effective Date of this Agreement and will depend on the how well or not well Merchant’s business will be performing following the Effective Date. As an extreme example, in the event Merchant’s business ceases to exist after Millstone’s purchase of the Purchased Future Receipts for reason outside Merchant’s control, Millstone may never recover any moneys spent on such purchase. Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 4 iii. The amount of the Daily Installment set forth in Section 1 of this Agreement is calculated based upon the information concerning an average amount of daily receipts collected by Merchant’s business immediately prior to the Effective Date of this Agreement which information was provided by Merchant to Millstone. iv. The amounts of Merchant’s future daily receipts may increase or decrease over time. v. If, based upon the Reconciliation and/or the Adjustment procedures described above, it will be determined that the actual daily amounts of the Specified Percentage of the Future Receipts get reduced in comparison to the amount of the Daily Installment as of the Effective Date set forth in Section 1 of this Agreement, and in comparison to the amount that both Merchant and Millstone may have anticipated or projected because Seller’s business has slowed down, or if the full Purchased Amount is not remitted because Merchant’s business went bankrupt or otherwise ceased operations in the ordinary course of business (but not due to Merchant’s willful or negligent mishandling of its business), and Merchant shall have not breached this Agreement, Merchant would not owe anything to Millstone and would not be in breach of or in default under this Agreement. b. Millstone’s Risk Acknowledgments. Millstone agrees to purchase the Purchased Future Receipts knowing the risks that Merchant’s business may slow down or fail, and Millstone assumes these risks based exclusively upon the information provided to it by Merchant and related to the business operations of Merchant’ business prior to the date hereof and upon Merchant’s representations, warranties and covenants in this Agreement that are designed to give Millstone a reasonable and fair opportunity to receive the benefit of its bargain. Furthermore, Millstone hereby acknowledges and agrees that Merchant shall be excused from performing its obligations under this Agreement in the event Merchant’s business ceases its operations exclusively due to the following reasons (collectively, the “Valid Excuses”): i. adverse business conditions that occurred for reasons outside Merchant’s control and not due to Merchant’s willful or negligent mishandling of its business; ii. loss of the premises where the business operates (but not due to Merchant’s violation of its obligations to its landlord); iii. bankruptcy of Merchant; iv. natural disasters or similar occurrences beyond Merchant’s control. c. Not a Loan. Merchant and Millstone agree that the Purchase Price is paid to Merchant in consideration for the ownership of the Purchased Future Receipts and that payment of the Purchase Price by Millstone is not intended to be, nor shall it be construed as a loan from Millstone to Merchant that requires absolute and unconditional repayment on a maturity date. To the contrary, Millstone’s ability to receive the Purchased Amount pursuant to this Agreement, and the date when the Purchased Amount is paid in full (if ever) are subject to and conditioned upon performance of Merchant’s business. If, nevertheless, a court having jurisdiction over this Agreement and the parties hereto shall have determined that Merchant received a loan from Millstone, and Millstone has charged or received interest hereunder in excess of the highest rate allowed by law, then the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by applicable law and Millstone shall promptly refund to Merchant any interest received by Millstone in excess of the maximum lawful rate. REPRESENTATIONS, WARRANTIES AND COVENANTS 15. Merchant represents, warrants and covenants that as of this date and during the term of this Agreement: a. Financial Condition and Financial Information. Merchant’s bank and financial statements, copies of which have been furnished to Millstone, and future statements which may be furnished hereafter pursuant to this Agreement or upon Millstone’s request, fairly represent the financial condition of Merchant as of the dates such statements are issues, and prior to execution of the Agreement there has been no material adverse changes, financial or otherwise, in such condition, operation or ownership of Merchant. Merchant has a continuing, affirmative obligation to advise Millstone of any material adverse change in its financial condition, operation or ownership. Millstone may request statements at any time during the term of this Agreement and Merchant shall provide them to Millstone within 5 business days. Merchant’s failure to do so is a material breach of this Agreement. b. Governmental Approvals. Merchant 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. Merchant 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. Merchant 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 Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 5 or violation of, or default under, any agreement or instrument by which Merchant is bound or any statute, rule, regulation, order or other law to which Merchant is subject, nor require the obtaining of any consent, approval, permit or license from any governmental authority having jurisdiction over Merchant. All organizational and other proceedings required to be taken by Merchant to authorize the execution, delivery and performance of this Agreement have been taken. The person signing this Agreement on behalf of Merchant has full power and authority to bind Merchant to perform its obligations under this Agreement. e. Accounting Records and Tax Returns. Merchant will treat receipt of the Purchase Price 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 Millstone is entitled to audit Merchant’s accounting records upon reasonable Notice in order to verify compliance. Merchant hereby waives any rights of privacy, confidentiality or taxpayer privilege in any litigation or arbitration arising out of this Agreement in which Merchant asserts that this transaction is anything other than a sale of future receipts. f. Taxes; Workers Compensation Insurance. Merchant will promptly pay, when due, all taxes, including without limitation, income, employment, sales and use taxes, imposed upon Merchant’s business by law, and will maintain workers compensation insurance required by applicable governmental authorities. g. Business Insurance. Merchant will maintain general liability and business-interruption insurance naming Millstone as loss payee and additional insured in the amounts and against risks as are satisfactory to Millstone and shall provide Millstone proof of such insurance upon request. h. Electronic Check Processing Agreement. Merchant shall not change its processor, add terminals, change its financial institution or bank account(s) or take any other action that could have any adverse effect upon Merchant’s obligations or impede Millstone’s rights under this Agreement, without Millstone’s prior written consent. i. No Diversion of Future Receipts. Merchant shall not allow any event to occur that would cause a diversion of any portion of Merchant’s Future receipts from the Approved Bank Account without first notifying Millstone of such diversion. j. Change of Name or Location. Merchant shall not conduct Merchant’s businesses under any name other than as disclosed to the Processor and Millstone and will not change any of its places of business without first obtaining Millstone’s written consent. k. Prohibited Business Transactions: Merchant shall not: (i) transfer or sell all or substantially all of its assets (including without limitation the Collateral or any portion thereof) without first obtaining Millstone’s consent; or (ii) make or send notice of its intended bulk sale or transfer. l. No Closing of Business. Merchant 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 Millstone, and (ii) providing Millstone with a written agreement of a purchaser or transferee of Merchant’s business or assets assuming all of Merchant’s obligations under this Agreement pursuant to documentation satisfactory to Millstone. Merchant represents that it has no current plans to close its business either temporarily (for renovations, repairs or any other purpose), or permanently. Merchant agrees that until Millstone shall have received all of the Purchased Amount, Merchant will not voluntarily close its business on a permanent or temporarily basis for renovations, repairs, or any other purposes. Notwithstanding the foregoing, Merchant shall have the right to close its business temporarily if such closing is necessitated by a requirement to conduct renovations or repairs imposed upon Merchant’s business by legal authorities having jurisdiction over Merchant’s business (such as from a health department or fire department, or if such closing is necessitated by circumstances outside Merchant’s reasonable control. Prior to any such temporary closure of its business, Merchant shall provide Millstone ten (10) business days advance notice. m. No Pending Bankruptcy. As of the date of Merchant’s execution of this Agreement, Merchant is not insolvent, 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 Merchant. Merchant represents that it has not consulted with a bankruptcy attorney on the issue of filing bankruptcy within six months immediately preceding the date of this Agreement. n. Estoppel Certificate. Merchant will at any time, and from time to time, upon at least one (1) day’s prior notice from Millstone to Merchant, execute, acknowledge and deliver to Millstone and/or to any other person or entity specified by Millstone in its notice, 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. Working Capital Funding. Merchant shall not further encumber the Future Receipts, without first obtaining written consent of Millstone. p. Unencumbered Future Receipts. Merchant 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. Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 6 q. Business Purpose. Merchant 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. Merchant’s execution of and/or performance of its obligations under this Agreement will not cause or create an event of default by Merchant under any contract, which Merchant is or may become a party to. s. Right of Access. In order to ensure Merchant’s compliance with the terms of this Agreement, Merchant hereby grants Millstone the right to enter, without notice, the premises of Merchant’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 Merchant’s daily receipts to the Processor and to ensure that Merchant has not violated any other provision of this Agreement. Furthermore, Merchant hereby grants Millstone and its employees and consultants access to Merchant’s employees and records and all other items of property located at the Merchant’s place of business during the term of this Agreement. Merchant hereby agrees to provide Millstone, upon request, all and any information concerning Merchant’s business operations, banking relationships, names and contact information of Merchant’s suppliers, vendors and landlord(s), to allow Millstone to interview any of those parties. t. Phone Recordings and Contact. Merchant agrees that any call between Merchant and Millstone and its owners, managers, employees and agents may be recorded and/or monitored. Furthermore, Merchant acknowledges and agrees that: (i) it has an established business relationship with Millstone, its managers, employees and agents (collectively, the “Millstone Parties”) and that Merchant may be contacted by any of the Millstone Parties from time-to-time regarding Merchant’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) that any such contact may be made by any of the Millstone Parties in person or at any phone number (including mobile phone number), email addresses, or facsimile number belonging to Merchant’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 Merchant with respect to this Agreement have such knowledge, experience and skill in financial 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, Merchant entering into this Agreement. v. Merchant’s Due Diligence. The person authorized to sign this Agreement on behalf of Merchant: (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 Millstone. w. Arm-Length Transaction. The person signing this Agreement of behalf of Merchant: (a) has read and fully understands content of this Agreement; (b) has consulted to the extent he/she wished with Merchant’s own counsel in connection with the entering into this Agreement; (c) he or she has made sufficient investigation and inquiry to determine whether this Agreement is fair and reasonable to Merchant, and whether this Agreement adequately reflects his or her understanding of its terms. x. Millstone’s Consent. Merchant agrees that in every instance Merchant’s rights under this Agreement are contingent upon first obtaining Millstone’s consent, such consent may be withheld, granted or conditioned at Millstone’s sole and absolute discretion. y. No Reliance on Oral Representations. This Agreement contains the entire agreement between Merchant and Millstone with respect to the subject matter of this Agreement, and supersedes each course of conduct previously pursued or acquiesced in, and each oral agreement and representation previously made, by Millstone or any of the Millstone Parties with respect thereto (If any), whether or not relied or acted upon. No course of performance or other conduct subsequently pursued or acquiesced in, and no oral agreement or representation subsequently made, by the Millstone 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 Merchant’s obligations pursuant to this Agreement or any rights and remedies of the parties to this Agreement. PLEDGE OF SECURITY 16. Pledge. As security for the prompt and complete payment and performance of any and all liabilities, obligations, covenants or agreements of Merchant under this Agreement, now or hereafter arising from, out of or relating to this Agreement, whether direct, indirect, contingent or otherwise (hereinafter referred to collectively as the “Obligations”), Merchant hereby pledges, assigns and hypothecates to Millstone and grants to Millstone a continuing, perfected and first priority lien upon and security interest in, to and under all of Merchant’s right, title and interest in and to the following (collectively, the “Collateral”), whether now existing or hereafter from time to time acquired: a. all accounts, including without limitation, all deposit accounts, accounts-receivable, and other receivables, Guarantor #1 Initials: [ ] Guarantor #2 Initials: [ ] 202404111746 IndexNO. INDEX #: E2024006259 E2024006259 FILED: MONROE COUNTY CLERK 04/11/2024 01:13 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/11/2024 7 chattel paper, documents, equipment, general intangibles, instruments, and inventory, as those terms are defined by Article 9 of the Uniform Commercial Code (the “UCC”), now or hereafter owned or acquired by Merchant; and b. all Merchant’s proceeds, as that term is defined by Article 9 of the UCC. 17. Termination of Pledge. Upon the payment and performance by Merchant in full of the Obligations, the security interest in the Collateral pursuant to this Pledge shall automatically terminate without any further act of either party