Sponsor Forfeiture Letter, by and among Clover Leaf Capital Corp., Yntegra Capital Investments LLC in the capacity as the Purchaser Representative and Stanton E. Ross

Exhibit 10.2

Clover Leaf Capital Corp.
1450 Brickell Avenue, Suite 2520
Miami, FL 33131

June 1, 2023

Sponsor:

Clover Leaf Capital Corp.
c/o Yntegra Capital Investments, LLC
1450 Brickell Avenue, Suite 2520

Miami, FL 33131

Ladies and Gentlemen:

Reference is hereby made to that certain Agreement and Plan of Merger, dated on or about the date hereof (as amended from time to time in accordance with the terms thereof, the “Merger Agreement”), by and among (i) Clover Leaf Capital Corp., a Delaware corporation (including any successor entity thereto, the “Purchaser”), (ii) CL Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of the Purchaser (“Merger Sub”), (iii) Yntegra Capital Investments LLC, a Delaware limited liability company, in the capacity as the representative from and after the Effective Time for the stockholders of the Purchaser (other than the Company Stockholder as of immediately prior to the Effective Time and its successors and assignees) in accordance with the terms and conditions of this Agreement (the “Purchaser Representative”), (iv) Kustom Entertainment, Inc., a Nevada corporation (the “Company”), and (v) Digital Ally, Inc., a Nevada corporation and the sole stockholder of the Company (the “Company Stockholder”). Any capitalized terms used but not defined in this letter agreement (this “Agreement”) will have the meanings ascribed thereto in the Merger Agreement.

In connection with the transactions contemplated by the Merger Agreement, Yntegra Capital Investments LLC, a Delaware limited liability company (the “Sponsor”), has agreed to enter into this Agreement with the Purchaser and Stanton E. Ross relating to certain Purchaser Common Stock held by the Sponsor that were initially purchased by the Sponsor in a private placement prior to the IPO (the “Founder Shares”). The Sponsor hereby agrees to forfeit up to 864,452 shares of Purchaser Class B Common Stock (or shares of Purchaser Class A Common Stock, if such shares of Purchaser Class B Common Stock have been converted to shares of Purchaser Class A Common Stock prior to the Closing) currently held the Sponsor (the “Adjustment Shares”) in connection with the Redemption (as defined below) and agrees to transfer and/or forfeit up to 864,452 shares of Purchaser Class B Common Stock (or shares of Purchaser Class A Common Stock, if such shares of Purchaser Class B Common Stock have been converted to shares of Purchaser Class A Common Stock prior to the Closing) currently held the Sponsor (the “Earnout Shares”) subject to Section 2 hereof. For the avoidance of doubt, other than the Adjustment Shares and the Earnout Shares, the Sponsor shall retain any other Purchaser Securities it holds. The transactions contemplated by this Agreement are contingent upon, and will be effective only upon, the consummation of the transactions contemplated by the Merger Agreement (the “Closing”).

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Sponsor and the Purchaser hereby agree as follows:

(a) As soon as practicable after December 31, 2023 and December 31, 2024, as applicable, but no later than five (5) days after the audit of the financial statements of the Purchaser (including any related notes thereto), consisting of the consolidated balance sheets of the Purchaser as of December 31, 2023 and December 31, 2024, as applicable, and the related consolidated income statements and statements of cash flow for the fiscal year then ended, each audited by PCAOB-qualified auditors in accordance with GAAP and PCAOB standards (the “Audited Financial Statements”), has been completed, the Purchaser shall deliver to Sponsor and Stanton E. Ross (i) the Audited Financial Statements and (ii) a draft statement, which shall include Purchaser’s calculation of the Earn-Out Payment, if any, along with reasonable supporting documentation used in the preparation of such statement (the “Proposed Earn-Out Statement”).

(b) Sponsor and Stanton E. Ross shall each have thirty (30) days following receipt of the Proposed Earn-Out Statement during which to notify Purchaser of any dispute of any item contained in the Proposed Earn-Out Statement, which notice shall set forth in reasonable detail the basis for such dispute and all items or amounts as to which Sponsor or Stanton E. Ross disagrees (the “Earn-Out Dispute Notice”). For purposes of evaluating the Proposed Earn-Out Statement, Purchaser shall (A) make available or provide reasonable access to Sponsor and Stanton E. Ross and their Representatives, upon advance notice and during normal business hours, all information, records, data and working papers created or used in connection with the preparation of the Proposed Earn-Out Statement by Purchaser, the Company and their Representatives and (B) permit reasonable access, upon advance notice and during normal business hours, to Purchaser’s, the Company’s and its Subsidiaries’ facilities, personnel and respective Representatives, in each case, as may be reasonably necessary for Sponsor and Stanton E. Ross to analyze the Proposed Earn-Out Statement and to determine if he or it shall deliver an Earn-Out Dispute Notice.

(c) If Sponsor and/or Stanton E. Ross does not deliver an Earn-Out Dispute Notice to the Purchaser within such thirty (30) day period, or both parties notify Purchaser of its agreement with the Proposed Earn-Out Statement prior to the expiration of such thirty (30) day period, the Proposed Earn-Out Statement prepared by the Purchaser shall be final, conclusive, non-appealable and binding on all of the Parties.

(d) If Sponsor and/or Stanton E. Ross does deliver an Earn-Out Dispute Notice to the Purchaser of any such dispute within such thirty (30) day period, within five (5) business days thereafter, Sponsor shall transfer to Stanton E. Ross a number of shares of Purchaser Common Stock equal to the undisputed amount of the applicable Earn-Out Payment and such number of the Sponsor’s shares of Purchaser Common Stock equal to the undisputed amount of the Earn-Out Payment shall no longer be subject to forfeiture (the “Undisputed Earn-Out Payment”). Any disputes regarding the Proposed Earn-Out Statement shall be resolved as follows:

(i) Purchaser, Sponsor and Stanton E. Ross shall cooperate in good faith to resolve any such dispute as promptly as possible.

(ii) If Purchaser, Sponsor and Stanton E. Ross are unable to resolve any such dispute within twenty-one (21) days (or such longer period as Purchaser, Sponsor and Stanton E. Ross shall mutually agree in writing) of the delivery of an Earn-Out Dispute Notice, such dispute and each party’s work papers related thereto shall be submitted to and such dispute shall be resolved in accordance with this Section 2 by a nationally recognized firm of independent certified public accountants appointed by the parties by mutual agreement, other than parties’ accountants (the “Independent Accountant”). Parties shall use reasonable efforts to cause the Independent Accountant to render a written decision resolving the matters submitted to the Independent Accountant within thirty (30) days of the making of such submission. Parties shall instruct the Independent Accountant that (A) the scope of the disputes to be resolved by the accounting firm shall be limited to whether the items in dispute that were included in the Earn-Out Dispute Notice were prepared in accordance with this Agreement and the Independent Accountant shall determine, on such basis, whether and to what extent, the Proposed Earn-Out Statement requires adjustment, (B) the Independent Accountant’s decision shall be based solely on written submissions and presentations by the parties and their respective Representatives and not by independent review, and (C) the Independent Accountant shall address only those items in dispute and may not assign a value greater than the greatest value for such item claimed by either party or smaller than the smallest value for such item claimed by either party. The determination of the Independent Accountant shall be deemed to be an arbitral award and judgment may be entered upon such determination in any court having jurisdiction over the party against which such determination is to be enforced.

(iii) The Proposed Earn-Out Statement and the calculation of the Earn-Out Payment, as adjusted to reflect the resolution of the Sponsor’s and/or Stanton E. Ross’ objections (as agreed upon by parties or as determined by the Independent Accountant (the “Final Earn-Out Payment”)) shall be final, conclusive, non-appealable and binding on all of the parties.

(iv) Within five (5) business days after the date a Final Earn-Out Payment becomes final (the “Earn-Out Payment Deadline”), Sponsor shall transfer to Stanton E. Ross a number of shares of Purchaser Common Stock equal to the applicable Final Earn-Out Payment.

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Please indicate your agreement to the foregoing by signing in the space provided below.

Accepted and agreed, effective as of the date first set forth above:

[Signature Page to Sponsor Contingent Forfeiture Letter]