ACQUIRED SALES CORP.

May 8, 2019

Mr. Erik S. Lundgren

CBD Lion LLC

25669 N. Hillview Ct.

Mundelein, IL 60060

 

Re:Letter of Intent 

Dear Erik,

This is a letter of intent (this “LOI”) between CBD Lion LLC (“Lion”), the
undersigned owners of Lion (the “Lion Owners”), Acquired Sales Corp. (“AQSP”),
Gerard M. Jacobs (“GJacobs”) and William C. Jacobs (“WJacobs”), to engage in the
following transaction (the “Transaction”), subject to the following conditions,
and also subject to the following agreements and covenants, intending to be
legally bound hereby:

The Transaction

AQSP will acquire 100% of the ownership interests in Lion in a reorganization,
for the following consideration: Two Million Dollars ($2,000,000) in cash, plus
the greater of: (i) Five Million (5,000,000) shares or (ii) a number of shares
with a value at closing of the Transaction equal to 50% of the value of the
aggregate consideration deemed paid to the Lion Owners for their ownership
interests in Lion, in each case, such shares being in the form of unregistered
common stock of AQSP (the “Stock Consideration”), provided that the Lion Owners
shall enjoy so-called “piggyback registration rights” in regard to the Stock
Consideration, and provided further that the Lion Owners shall enjoy so-called
"demand registration rights" in regard to the Stock Consideration if no
piggyback registration statement is filed with the SEC within 120 days following
the closing of the Transaction, and provided further that at the closing of the
Transaction, AQSP shall cause up to Four Hundred Sixty-Two Thousand Four Hundred
Thirty Dollars ($462,430) of related party debt owed by Lion to be repaid in
full (collectively, the “Transaction”).

Conditions

Closing of the Transaction will be subject to the following conditions:

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1. Lion shall, with the advice and assistance of WJacobs, AQSP’s President and
Chief Financial Officer, immediately prepare Lion’s 2017, 2018 and 2019
financial statements, including statements of income, balance sheets and cash
flows (the “Lion Financial Statements”), for audit and review.

2. As promptly as possible following the execution of this LOI, Lion at its
expense shall engage AQSP’s PCAOB-qualified independent firm of certified public
accountants, Fruci & Associates II, PLLC, Spokane, Washington, to audit the Lion
Financial Statements for fiscal years 2017 and 2018, and to review the Lion
Financial Statements for quarterly periods during 2019, in accordance with U.S.
generally accepted accounting principles, and to provide all opinion letters and
other documents as shall be necessary to allow Lion to be acquired by AQSP in
the Transaction pursuant to all applicable U.S. Securities and Exchange
Commission (“SEC”) and FASB rules and regulations, and to allow AQSP to timely
file all necessary securities filings with the SEC (collectively, the “Audit”).
If, the results of the Audit are not acceptable to AQSP, then the Transaction
shall be abandoned.

3. Lion shall allow AQSP to conduct a so-called “due diligence” investigation of
Lion’s business, permits, leases, contracts, books and records, financials,
historical operations, business practices, computer systems, prospects, legal,
taxes, and other matters. AQSP shall use its best efforts to complete such “due
diligence” investigation within 30 days. If the results of such “due diligence”
investigation are not acceptable to AQSP, then the Transaction shall be
abandoned. Upon making such a determination, AQSP shall notice Lion promptly of
AQSP’s abandonment of the Transaction as a result of the “due diligence”
investigation.

4. Upon completion of the “due diligence” investigation and negotiation of a
merger agreement (the “Merger Agreement”) containing representations,
warranties, covenants, conditions, and indemnifications customary to
transactions like the Transaction, AQSP and Lion shall execute and deliver the
Merger Agreement.  The Closing of the Transaction pursuant to the Merger
Agreement shall be conditioned upon the execution and delivery by Lion and AQSP
of mutually acceptable, legally binding, definitive closing documentation (the
“Definitive Documents”) including:

(a) five-year employment agreement between AQSP and Erik S. Lundgren (the
“Lundgren Employment Agreement”); and

(b) a shareholders agreement (the “Shareholders Agreement”) among the Lion
Owners, GJacobs and WJacobs (collectively the “Parties to the Shareholders
Agreement”), it being understood that the Shareholders Agreement shall include,
among other things, agreements by each of the Parties to the Shareholders
Agreement:

(1) to nominate, support and vote in favor of slates of nominees for the Board
of Directors of AQSP who are mutually acceptable to the Parties to the
Shareholders Agreement;

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(2) to support and vote in favor of base salaries, a management bonus pool, and
future stock options or warrants, for the key executives of AQSP including
GJacobs, WJacobs and the Lion Key Executives, that are mutually acceptable to
the Parties to the Shareholders Agreement;

(3) to support and vote in favor of future acquisitions and divestitures,
capital raises, and other lawful corporate transactions from time to time, that
are mutually acceptable to the Parties to the Shareholders Agreement; and

(4) not to directly or indirectly sell or transfer any of their AQSP stock,
options or warrants as part of an agreement, contract, plan or arrangement of
any nature that is intended to result in a change of control of AQSP, unless
such agreement, contract, plan or arrangement is mutually acceptable to the
Parties to the Shareholders Agreement and is approved by a majority of the Board
of Directors of AQSP.

5. Closing of the Transaction under the Merger Agreement shall be conditioned
upon AQSP offering five-year employment agreements (such employment agreements,
together with the Lundgren Employment Agreement, the “Employment Agreements”) to
each of the following key executives of Lion (such key executives, together with
Erik S. Lundgren, the “Lion Key Executives”):

Chris Nauert

Katie M. Nauert

Andrew Stepniak

Chris Weiland

 

it being understood that the Employment Agreements (including the Lundgren
Employment Agreement) shall include minimum base salaries for each of the Lion
Key Executives of at least $100,000 per year, and shall also include
participation for the Lion Key Executives in an annual AQSP management bonus
pool, such bonus pool to be allocated as mutually agreed upon by the
Compensation Committee of the Board of Directors of AQSP, GJacobs and Erik S.
Lundgren.

6. Closing of the Transaction shall be conditioned upon the completion of a
capital raise of at least Four Million Dollars ($4,000,000) by AQSP (the
“Capital Raise”).

7. Closing of the Transaction shall be conditioned upon the receipt by Lion of a
written opinion from Lion’s tax counsel that the Transaction qualifies as a
reorganization that is “tax free” in regard to the Stock Consideration pursuant
to the U.S. tax code and applicable Internal Revenue Service regulations
promulgated thereunder (the “Tax Opinion”).

8. Closing of the Transaction shall be conditioned upon approval of the
Transaction by the Board of Directors of AQSP, and, if necessary, by the
shareholders of AQSP. The board of managers of Lion and the Lion Owners have all
approved the Transaction, subject only to (a) approval of the Definitive
Documents by the Lion Owners’ legal counsel, (b) the receipt by the Lion Owners
of

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the Tax Opinion from Lion’s tax counsel, and (c) elimination of Erik S.
Lundgren’s personal guaranty of Lion’s lease payment obligations or any other
corporate obligations.

9. Closing of the Transaction shall be conditioned upon the completion of all
necessary securities filings and the obtaining of any necessary approvals from
the SEC.

Pre-Closing Agreements and Covenants

10. During the period between the signing of this LOI and the execution and
delivery of the Merger Agreement or the termination of this LOI, Lion and the
Lion Owners shall not directly or indirectly enter into any discussion(s),
negotiation(s), letter(s) of intent, merger(s), reorganization(s), stock
sale(s), asset sale(s) (other than asset sales in the ordinary, normal, and
customary course of Lion’s business), other transaction(s), loan agreement(s),
financing agreement(s) or arrangement(s) of any type, other capital raise(s), or
other contract(s) or arrangement(s) with any third party, or any other
agreement(s), contract(s) or arrangement(s) outside the ordinary course of
Lion’s businesses that would or might delay or make more costly or difficult the
closing of the Transaction.  The Merger Agreement shall include similar
covenants regarding the period between signing the Merger Agreement and the
closing of the Transaction or termination of the Merger Agreement.

11. During the period between the signing of this LOI and the execution and
delivery of the Merger Agreement or the termination of this LOI, the Lion Owners
shall operate Lion only in accordance with the ordinary, normal and customary
course thereof consistent with past practices. The Merger Agreement shall
include similar covenants regarding the period between signing the Merger
Agreement and the closing of the Transaction or termination of the Merger
Agreement.

12. Lion, the Lion Owners, AQSP, GJacobs and WJacobs shall use commercially
reasonable efforts to cause the closing of the Transaction to occur as soon as
practicable, subject to the fulfillment of all of the conditions described
above.

13. Upon execution and delivery of the Merger Agreement (which shall include, as
exhibits, approved drafts of the Definitive Documents and a Tax Opinion to be
delivered at closing), then and in such event AQSP shall make a $300,000 loan to
Lion to be used by Lion exclusively for growth capital and not to be used to
repay any related party debt of Lion nor to pay any increased salaries or
bonuses to any of the Lion Key Executives. If the Transaction closes, then this
loan shall be extinguished, because post-closing of the Transaction, Lion and
AQSP will constitute the same entity. The Merger Agreement shall provide that if
the Transaction does not close and the Merger Agreement is terminated, then the
Loan shall be repaid by Lion to AQSP in six equal monthly installments of
principal, together with accrued interest at the rate of 6% per year, with the
first such installment due and payable by Lion to AQSP on the first day of the
first calendar month following the termination of the Merger Agreement.

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Post-Closing Agreements and Covenants

14. As promptly as practicable following the closing of the Transaction, AQSP
shall change its name to “CBD Lion Corp.” or to a similar name that is mutually
acceptable to the Board of Directors of AQSP and to the Lion Owners, and shall
change its ticker symbol to “ROAR” or other ticker symbol that is mutually
acceptable to the Board of Directors of AQSP and to the Lion Owners, subject to
all necessary approvals.

Termination of this LOI

15. This LOI shall terminate, without any payment by or penalty due from any
party, upon execution of the Merger Agreement or if:

(a) The Audit shall not have been completed, or the results of the Audit shall
have not been accepted by AQSP, by an outside date of August 31, 2019;

(b) AQSP has not closed the Capital Raise by an outside date of September 30,
2019;

(c) The Merger Agreement has not been signed by October 31, 2019 (the Merger
Agreement, if executed, shall include an outside closing date of October 31,
2019, or such other date as mutually agreed by the parties);

(d) AQSP shall have delivered written notice to Lion that AQSP is abandoning the
Transaction due to a determination that the results of the “due diligence”
investigation of Lion are not acceptable to AQSP; or

(e) Any material provisions of this LOI shall be adjudged by a court or the SEC
to be invalid or unenforceable, and thereafter the parties to this LOI are
unable to mutually agree upon how to proceed forward with the Transaction as
impacted by such court or SEC action.

Miscellaneous

16. Each of the parties to this LOI shall bear its, his or her own fees and
expenses in connection with the proposed Transactions. Without limiting the
generality of the foregoing, each of the parties to this LOI shall be solely
responsible for the fees and expenses owed by it, him or her to any lawyers,
accountants, financial advisors, investment bankers, brokers or finders employed
by such party. Notwithstanding the foregoing two sentences, upon execution and
delivery of the Merger Agreement (which shall include, as exhibits, approved
drafts of the Definitive Documents and a Tax Opinion to be delivered at
closing), then and in such event AQSP shall pay or reimburse Lion for all of the
costs and expenses of the Audit regardless whether the Transaction closes or the
Merger Agreement is terminated. AQSP acknowledges that Taft Stettinius &
Hollister LLP (“Taft”) is being engaged to represent Lion in the Transaction,
and that Taft has represented AQSP in the past in unrelated matters, but that
Taft is not currently representing AQSP in the Transaction or any other matters.

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17. AQSP shall be permitted to publicly disclose this LOI, and to share
information regarding Lion, on a need-to-know basis, as may be necessary or
desirable in connection with AQSP’s efforts to complete the Capital Raise or to
satisfy the conditions to closing the Transaction, or otherwise as may be
required to comply with applicable securities laws and regulations in the
opinion of AQSP’s securities counsel.

18. The Lion Owners acknowledge that AQSP is a publicly traded company and that
unauthorized disclosure of any material information regarding AQSP or the
Transaction could subject the disclosing party to scrutiny and potential
liability under applicable securities laws and regulations.

19. Signatures on this LOI may be signed by hand, or may be transmitted
electronically in pdf formal, and all of such signatures shall be deemed to be
valid original signatures.

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We look forward to building a large and successful public company together, for
the mutual benefit of AQSP’s shareholders and executives, and the Lion Owners
and the Lion Key Executives. If the foregoing terms and conditions are
acceptable, please sign below, thanks.

Sincerely,

 

 

 

 

 

ACQUIRED SALES CORP.

 

 

 

 

 

By

/s/ Gerard M. Jacobs

 

/s/ Gerard M. Jacobs

 

Gerard M. Jacobs, CEO

 

Gerard M. Jacobs, in his individual capacity

 

 

 

 

 

 

 

 

 

 

 

/s/ William C. Jacobs

 

 

 

William C. Jacobs, in his individual capacity

 

 

 

 

 

 

 

 

 

 

 

 

Accepted and agreed upon, intending to be legally bound hereby:

 

 

 

CBD LION LLC

 

 

 

 

 

By

/s/ Erik S. Lundgren

 

 

 

Erik S. Lundgren

 

 

Title

 

 

 

 

 

 

 

 

 

THE LION OWNERS:

 

 

 

 

 

/s/ Erik S. Lundgren

 

/s/ Gary S. Lundgren

Erik S. Lundgren

 

Gary S. Lundgren

 

 

 

/s/ Katie M. Nauert

 

/s/ Gayle Lundgren

Katie M. Nauert

 

Gayle Lundgren

 

 

 

/s/ Andrew Stepniak

 

 

Andrew Stepniak

 

 

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