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Item
1.01
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Entry
into a Material Definitive Agreement.
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MCA New Braunfels
Operating Company LLC (“MCA”), a subsidiary of Clearday, Inc. (“Clearday” or the “Company”),
entered into two separate financing agreements providing aggregate net proceeds of approximately $188,875
after payment of fees to the financing parties.
The financings
were used in part to fund Clearday’s innovative care business in advance of the approximately
$785,000 in refunds of employment taxes through Employee Retention Credits under the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act) applicable to the second quarter of 2021. The collection of such amounts from
the Internal Revenue Service has been delayed but is expected to occur
in October.
One financing
agreement is the Futures Receipts Sale and Purchase Agreement dated as of September 28, 2021 (“Factoring Agreement 1”), by
and between MCA and Cloudfund LLC d/b/a Samson Group (“Financier 1”). Under Factoring Agreement 1, MCA sold to
Financier 1 a specified percentage of its future receipts (as defined by Factoring Agreement 1, which include the future resident
revenues in the New Braunfels residential care facility owned by MCA) equal to $142,000
for $100,000, less origination and other fees of $6,000. MCA agrees to repay this purchased receivable amount in 10 equal weekly
installments. Financier 1 has specified customary collection
procedures for the collection and remittance of the weekly payable amount including direct payments from a specified authorized bank
account. Factoring Agreement 1 expressly provides that the sale of the future receipts shall
be construed and treated for all purposes as a true and complete sale and includes customary provisions granting a security interest
under the Uniform Commercial Code in accounts and the proceeds. Factoring Agreement 1 also provides customary provisions including representations,
warranties and covenants, indemnification, arbitration and the exercise of remedies upon a breach
or default.
The
obligations of MCA under Factoring Agreement 1 are irrevocably, absolutely, and
unconditionally guaranteed by James Walesa, the Company’s Chairman and Chief Executive Officer. The Personal Guaranty of Performance
by Mr. Walesa to Financier 1 provides customary provisions, including representations, warranties and covenants.
The
foregoing descriptions of Factoring Agreement 1 and the related Personal Guaranty of Performance by Mr. Walesa are not complete and are
qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibit 10.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
The other financing
agreement is the Revenue Purchase Agreement and Security Agreement and Guaranty of Performance dated as of September 28, 2021 (“Factoring
Agreement 2”), by and between MCA and Samson MCA LLC (“Financier 2”). Under Factoring Agreement 2, MCA sold to
Financier 2 a specified percentage of its future receipts (as defined by Factoring Agreement 2, which include the payments to
MCA as a result of its sale of goods and/or services such as its future resident revenues in the New Braunfels residential care facility
owned by MCA) equal to $142,000 for $100,000, less
origination and other fees of $5,125. The terms of Factoring Agreement 2 are substantially similar to the terms of Factoring Agreement
1. MCA agrees to repay the purchased receivable amount in 10 equal weekly installments. Financier 2 has specified customary collection procedures for the collection and remittance of the
weekly payable amount including direct payments from a specified authorized bank account. Factoring Agreement 2 expressly provides that
the sale of the future receipts shall be construed and treated for all purposes as a true
and complete sale and includes customary provisions granting a security interest under the Uniform Commercial Code in accounts and the
proceeds. Factoring Agreement 2 also provides customary provisions including representations, warranties and covenants.
The
obligations of MCA under Factoring Agreement 2 are also irrevocably, absolutely, and
unconditionally guaranteed by James Walesa, the Company’s Chairman and Chief Executive Officer. The Personal Guaranty of Performance
by Mr. Walesa to Financier 2 provides customary provisions, including representations, warranties and covenants,
indemnification, arbitration and the exercise of remedies upon a breach or default and a specified fee equal to 30% of the then outstanding
unpaid balance.
The
foregoing descriptions of Factoring Agreement 2 and the related Personal Guaranty of Performance by Mr. Walesa are not complete and are
qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibit 10.2
to this Current Report on Form 8-K and is incorporated
herein by reference.
