Document:

Exhibit 10.33

 

ACQUIRED SALES CORP.

31 N. Suffolk Lane, Lake Forest, IL  60045

June 22, 2016

Mr. David Meltzer

Mr. Warren Moon

Mr. Scott Carter

Mr. Derek Shaw

9900 Research Drive

Irvine, CA  92618

Re:  Letter of Intent

Gentlemen:

The purpose of this Letter of Intent (this "LOI") is to set forth certain non-binding and certain binding agreements between David C. Meltzer ("Meltzer"), H. Warren Moon ("Moon"), Michael Scott Carter ("Carter"), Derek B. Shaw ("Shaw"), and Sports 1 Marketing, LLC ("S1M") (Meltzer, Moon, Carter, Shaw and S1M being sometimes referred to collectively as "S1M Group"), Aggregated Marketing Platform Inc., a Delaware corporation ("AMP"), and Processing for a Cause Inc., a Delaware corporation ("PFAC"), and Acquired Sales Corp. ("AQSP"), Gerard M. Jacobs ("GJacobs"), and William C. Jacobs ("WJacobs") (all of the foregoing persons and entities being referred to individually as a "Party" and collectively as the "Parties"), in regard to the potential acquisitions (individually an "Acquisition" and collectively the "Acquisitions") by AQSP and/or its subsidiaries of the following corporations (individually a "Target" and collectively the "Targets"): AMP, PFAC, and Management Corp (as defined below).

Acquisition Targets

1. AMP. AMP is a Delaware corporation in good standing owned by Meltzer, Moon and Carter. Pursuant to an Agreement dated June 10, 2016, S1M Group contributed, sold, assigned and/or transferred to AMP all of S1M Group's rights, titles and interests of any nature relating to virtual gifting programs and the bundling of virtual gifting programs with traditional tv, radio, billboards, stadium screens, and/or other advertising (collectively "AMP Bundling"), including but not limited to AMP Bundling agreements, contracts and arrangements in regard to software under development by UnifyCloud and any intellectual property rights, copyrights, patent applications and/or patents associated therewith (the "AMP Software"), and AMP Bundling agreements, contracts and arrangements that have been signed or are under discussions/negotiations with professional sports teams and stadiums (collectively the "AMP Bundling Contracts"). AMP and S1M Group shall work collaboratively with AQSP in a good faith effort to cause the AMP Bundling Contracts to be in form and substance mutually acceptable to AMP, S1M Group and AQSP.

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2.  PFAC. PFAC is a Delaware corporation in good standing owned by Meltzer, Moon and Carter. Pursuant to an Agreement dated June 10, 2016, S1M Group contributed, sold, assigned and/or transferred to PFAC all of S1M Group's rights, titles and interests of any nature relating to "processing for a cause" and similar programs relating to credit card processing designed to benefit not-for-profit entities (collectively "PFAC Programs"), including but not limited to the Processing for a Cause Referral Agreement dated March 4, 2016, between S1M and Cornerstone Payment Systems Inc. DBA Cornerstone Payment Systems (the "Cornerstone Agreement"), and agreements, contracts and arrangements that have been signed or are under discussions/negotiations with merchants and other parties related thereto (collectively the "PFAC Contracts"). PFAC and S1M Group shall work collaboratively with AQSP in a good faith effort to cause the PFAC Contracts to be in form and substance mutually acceptable to PFAC, S1M Group and AQSP.

3.  Management Corp.  A new management corporation ("Management Corp") shall be established and owned by Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs.

Pre-Closing Activities

4. Interim Financing and Loan. Following the announcement of this Letter of Intent, AQSP plans to attempt to raise at least $725,000 in interim financing on terms and conditions acceptable to AQSP in its sole discretion (the "Interim Financing"). If but only if AQSP is successful in raising the Interim Financing, then AQSP plans to offer to loan $500,000 to AMP and PFAC, as joint and several borrowers, guaranteed by S1M, pursuant to terms, conditions, and loan documentation that are mutually acceptable to AQSP, S1M, AMP and PFAC each in its sole discretion (the "$500,000 Loan"), provided, that S1M Group, AMP and PFAC shall agree and covenant to use the proceeds of the $500,000 Loan solely to pay (a) amounts owed by AMP to UnifyCloud in regard to development of the AMP Software, (b) fees and expenses owed to WJacobs, the CPAs (as defined below) and other third party firms acceptable to the CPAs pursuant to Paragraph 5 and 6, (c) amounts owed by AMP to unaffiliated third parties under the AMP Bundling Contracts, and (d) other out of pocket expenses of the Targets paid to unaffiliated third parties during the Exclusivity Period that have been approved in advance in writing by AQSP.

5. Preparation of Financial Statements. Following the execution of this LOI, S1M Group, AMP and PFAC at their expense shall engage WJacobs to work with Shaw and the Targets to prepare 2014 and 2015 financial statements and interim 2016 financial statements (collectively the "Financial Statements") for each of the Targets, and to otherwise assist S1M Group and the Targets in regard to preparing for the closing (the "Closing") of the Acquisitions. S1M Group at its expense shall retain qualified firms acceptable to the CPAs to prepare and deliver such valuation reports and any other reports, acceptable in form and substance to the CPAs, as are necessary to properly prepare the Financial Statements to the satisfaction of the CPAs.

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6. Audit and Review of the Financial Statements. Following the preparation of the Financial Statements, S1M Group at its expense shall engage AQSP's outside firm of independent certified public accountants (the "CPAs") to audit the 2014 and 2015 Financial Statements including appropriate quarterly cutoff work, and to review the interim 2016 Financial Statements as necessary, all in accordance with U.S. generally accepted accounting principles (GAAP) and applicable U.S. Securities and Exchange Commission ("SEC") rules and regulations in regard to the Acquisitions, consistent with the advice of the CPAs and AQSP's securities counsel (collectively the "Audited Financial Statements").

7. Employment Agreements. Prior to the Closing, Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs shall enter into mutually acceptable multi-year employment contracts (collectively the "Employment Agreements") with Management Corp pursuant to which Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs shall manage the Targets and (following the Closing) AQSP, such Employment Agreements to be consistent with Exhibit A attached hereto and hereby made a part hereof.

8. Operation in Ordinary Course. AMP, PFAC and S1M Group agree and covenant that during the period between the signing of this Letter of Intent and the Closing, each of the Targets will operate solely in the ordinary course of its business consistent with past practices and there shall not be any material increases or decreases in compensation, capital expenditures, asset sales or affiliate transactions involving any of the Targets, nor shall there be any unusual cash withdrawals, unusual payments, unusual contracts or contract provisions, or other unusual transactions or business practices involving any of the Targets, excepting that the Targets will be allowed: (a) to take such actions and to make such payments as shall be necessary to comply with this Letter of Intent; (b) to make pre-Closing distributions to the S1M Group but only in amounts sufficient to cover income tax liabilities of S1M Group in regard to the Targets for tax periods ending on or before the date of Closing; (c) to make such personnel hires and expenditures as may be reasonably necessary to fulfill all bona fide contracts with third parties and to grow the Targets' businesses; and (d) if but only if AQSP has not made the $500,000 Loan, to make distributions to S1M Group that are not inconsistent with the Certification (as defined below).

9. Good Faith Efforts to Close. S1M Group, each of the Targets, and AQSP will all use good faith efforts to negotiate mutually acceptable the Definitive Acquisition Documents (as defined below) and the Shareholders Agreement (as defined below) and to close the Acquisitions as soon as practicable. Without limiting the generality of the foregoing sentence, S1M Group shall make itself reasonably available for meetings and telephone calls with potential capital sources, upon reasonable advance notice from AQSP.

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Conditions to Closing

10. The Closing shall be subject to the following conditions (the "Conditions to Closing"):

(a)  Due Diligence. S1M Group, AMP, PFAC and AQSP each shall have completed its due diligence investigation of the other Parties and the Targets, including without limitation an examination of corporate books and records, contracts, financials, historical operations, management, employees (including criminal background checks), business practices, computer systems, prospects, legal, tax, ERISA and other matters, and the results of such investigation shall be satisfactory to S1M Group, AMP, PFAC and AQSP, each in its sole discretion. Without limiting the generality of the foregoing sentence, the AMP Bundling Contracts, the PFAC Contracts, and the Employment Agreements shall be satisfactory to AQSP in its sole discretion;

(b) Approvals. All material third party approvals shall have been obtained, including but not limited to the approval of the Boards of Directors of AQSP (the "AQSP Board") and of each of the Targets, of the shareholders of AQSP if necessary, and of the parties to the AMP Bundling Contracts and the PFAC Contracts, if necessary;

(c) Certification. S1M Group shall have certified in writing (the "Certification") to AQSP: (a) the aggregate current assets of the Targets immediately prior to the Closing (the "Current Assets"); (b) the aggregate liabilities of the Targets immediately prior to the Closing excluding however the $500,000 Loan (the "Liabilities"); and (c) the amount by which the Current Assets exceed the Liabilities which shall not in any event be less than $10,000;

(d) Audited Financial Statements. The CPAs shall have delivered to AQSP the Audited Financial Statements, prepared in accordance with GAAP and accompanied by an unqualified opinion of the CPAs, and such Audited Financials shall have been accepted by AQSP in its sole discretion;

(e) Employment Agreements. Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs shall have entered into and delivered the Employment Agreements with Management Corp;

(f) Definitive Acquisition Documents. S1M Group, each of the Targets, AQSP, GJacobs and WJacobs shall have negotiated mutually agreeable definitive documentation of the Acquisitions including merger agreements (collectively the "Definitive Acquisition Documents"), containing agreements, representations, warranties, covenants, conditions, and indemnifications customary to transactions like the Acquisitions and consistent with this Letter of Intent. Without limiting the generality of the foregoing, and to eliminate any doubt:

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(1) In the Definitive Acquisition Documents, S1M Group will represent and warrant to AQSP that at the Closing the Targets are free and clear of all liabilities, liens, obligations, lawsuits, claims and encumbrances, actual or contingent, known or unforeseen, arising from, in connection with, or in regard to, the following categories of liabilities created or incurred prior to the Closing: any and all unpaid taxes, including payroll and income taxes, bank loans, shareholder loans, payroll claims, bonus claims, commission claims, severance claims, other compensation claims, employment discrimination or sexual harassment claims, breach of contract claims, credit card charge backs, stock options, stock warrants, phantom stock plans, stock appreciation rights or plans, pension obligations, deferred compensation agreements, purchase agreements that cannot be cancelled by the Targets at any time, consulting agreements, employment agreements other than the Employment Agreements, severance agreements or "change of control" agreements of any nature, and any lawsuits in regard to any of the foregoing, excepting only as disclosed as the Liabilities in the Certification; and

(2) In the Definitive Acquisition Documents, S1M Group will agree to fully indemnify and hold harmless AQSP and the Targets (and any corporations into which AQSP or the Targets may in the future be merged or otherwise acquired, and their respective successors), from and against any breaches of the representation and warranty set forth in Paragraph 10(f)(1) above that are asserted on or prior to the sixth anniversary of the Closing in regard to income tax liabilities, and on or prior to the first anniversary of the Closing in regard to all other liabilities, if and to the extent that liabilities in regard to such breaches amount to an aggregate in excess of $10,000, provided that S1M Group will not be obligated to make any payment in regard to any liability for which they are otherwise obligated to indemnify and hold harmless under this Paragraph 10(f)(2) unless and until such liability shall have been the subject of a final, non-appealable judgment or order by an authority of competent jurisdiction, or shall have been approved by S1M Group in writing;

(g) Shareholders Agreement. S1M Group, GJacobs and WJacobs shall have negotiated a mutually acceptable shareholders agreement (the "Shareholders Agreement") regarding matters such as: (a) the nomination of mutually acceptable slates of nominees for the AQSP Board; and (b) the voting of all shares of common stock of AQSP ("AQSP Stock") and all of the shares of common stock of any corporation into which AQSP may in the future be merged or otherwise acquired, and their respective successors that now or in the future are legally or beneficially owned by S1M Group, GJacobs or WJacobs, or by any of their respective affiliates, upon any and all matters which the shareholders of AQSP (or the shareholders of any corporation into which AQSP may in the future be merged or otherwise acquired, and their respective affiliates) are eligible to vote or to provide consent under applicable law, including but not limited to the election of directors, the approval of mergers or other acquisitions and all actions contemplated by the definitive documentation in regard to such mergers or other acquisitions, the issuance of capital stock (such as common stock, preferred stock, options, warrants or other securities), the borrowing of funds or other financing activities, the approval of employment agreements and employee benefit plans, the filing and settlement of litigation, changes to articles of incorporation, and so forth;

(h) Financing. AQSP shall have raised (the "Capital Raise") a minimum of $4,500,000 on terms and conditions mutually acceptable to S1M Group, to the AQSP Board, and to the Boards of Directors of each of the Targets, each in its or his sole discretion. Any shares of AQSP Stock issued in the Capital Raise, and any shares of AQSP Stock into which any securities issued in the Capital Raise can be converted, are collectively referred to as the "Capital Raise AQSP Stock"); and

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(i) Securities Filings. AQSP shall have completed all necessary securities filings deemed necessary or desirable in connection with the Acquisitions, the Employment Agreements, the Shareholders Agreement, the Capital Raise, and otherwise in connection with the Definitive Acquisition Documents, in the opinion of AQSP's securities counsel (collectively the "Securities Filings").

 

Closing

11. If all of the Conditions to Closing have been met, then at the Closing:

(a) Acquisition of AMP. S1M Group, AMP, AQSP and a wholly-owned subsidiary of AQSP (the "AMP Acquisition Sub") will execute and deliver the Definitive Acquisition Documents, pursuant to which 100% of AMP will be acquired by AQSP via a merger of AMP into AMP Acquisition Sub, in exchange for merger consideration that is the shares of AQSP Stock (the "AMP Stock Consideration") and cash (the "AMP Cash Consideration") described in Exhibit B attached hereto and hereby made a part hereof, allocated and paid out among the shareholders of AMP as set forth in said Exhibit B;

(b) Acquisition of PFAC. S1M Group, PFAC, AQSP and a wholly-owned subsidiary of AQSP (the "PFAC Acquisition Sub") will execute and deliver the Definitive Acquisition Documents, pursuant to which 100% of PFAC will be acquired by AQSP via a merger of PFAC into PFAC Acquisition Sub, in exchange for merger consideration that is the shares of AQSP Stock (the "PFAC Stock Consideration") and cash (the "PFAC Cash Consideration") described in Exhibit B attached hereto and hereby made a part hereof, allocated and paid out among the shareholders of PFAC as set forth in said Exhibit B;

(c) Acquisition of Management Corp. S1M Group, Management Corp, AQSP, GJacobs and WJacobs will execute and deliver the Definitive Acquisition Documents, pursuant to which 100% of Management Corp will be acquired by AQSP via a merger of Management Corp into AQSP, in exchange for merger consideration that is the shares of AQSP Stock (collectively the "Management Stock Consideration"), options and/or warrants to purchase shares of AQSP Stock (collectively the "Management Options and/or Warrants") and cash (the "Management Cash Consideration"), as described in Exhibit C attached hereto and hereby made a part hereof, allocated and paid out among the shareholders of Management Corp as set forth in said Exhibit C;

(d) Shareholders Agreement. Meltzer, Mooon, Carter, Shaw, GJacobs and WJacobs shall execute and deliver the Shareholders Agreement;

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(e) AQSP Board. The AQSP Board shall execute a Unanimous Written Consent adding Meltzer and Moon to the AQSP Board; and

(f) Right of First Refusal. If requested in writing by the investors in the Capital Raise, S1M shall grant to AQSP a right of first refusal to purchase S1M and its affiliates if S1M Group ever decide to sell such entities.

Post-Closing Activities

12. Name of AQSP. As promptly as feasible following the Closing, AQSP will adopt a new corporate name that is mutually acceptable to S1M Group and AQSP, subject to approval by the shareholders of AQSP if necessary, and to the completion of all necessary securities filings.

13.  Registration Statement. The AMP Stock Consideration, the PFAC Stock Consideration, and the Management Stock Consideration, and the AQSP Stock into which the Management Options and/or Warrants can be converted (collectively the "Transaction AQSP Stock"), and the Capital Raise AQSP Stock, will be newly issued, unregistered, restricted shares of AQSP Stock. Unless otherwise agreed by the Parties in writing, AQSP will use its best efforts to file a registration statement (the "Registration Statement") with the SEC covering all of the Transaction AQSP Stock, all of the Capital Raise AQSP Stock, and the AQSP Stock into which certain of AQSP's currently outstanding options, warrants, and rights to purchase warrants can be converted, no later than ninety (90) days after the Closing. AQSP shall use commercially reasonable efforts to cause the Registration Statement to become effective as promptly as practicable after the filing of the Registration Statement. All legal, accounting and filing fees associated with the Registration Statement will be borne by AQSP.

14. S1M Consulting Services. Following the Closing, AQSP and its subsidiaries may elect to hire S1M to perform consulting services on an hourly basis, as may be approved in writing from time to time by Meltzer, GJacobs, and the independent members of the AQSP Board.

15.  India. S1M is currently in discussions/negotiations with certain parties (collectively the "India Parties") in regard to a potential joint venture in India involving AMP Bundling and the AMP Software among other things (the "India JV") between the India Parties and a new corporation to be established and owned by S1M Group ("India Corp"). S1M Group will work collaboratively with India Corp and AQSP in a good faith effort to successfully consummate the India JV and all agreements, contracts and arrangements associated therewith (collectively the "India Contracts"), and to cause India Corp to be acquired by AQSP at the Closing or as promptly as practicable thereafter, all on terms and conditions mutually acceptable to S1M Group, India Corp and AQSP.

Various

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16. Exclusivity Period. The Parties recognize the need for an exclusivity period. The term the "Exclusivity Period" shall mean that period from the signing of this Letter of Intent until the date that is 9 months later, which is intended to be a long enough period of time to allow sufficient time for completion of the Audited Financial Statements, the Securities Filings, the Capital Raise, and the negotiation of the Employment Agreements, the Definitive Acquisition Documents and the Shareholders Agreement, provided, however, that if and in the event that AQSP makes the $500,000 Loan, then the term the "Exclusivity Period" shall mean that period from the date of signing of this Letter of Intent until the date that is 18 months later. In consideration of AQSP's time, effort and expense in attempting to close the Acquisitions, S1M Group and the Targets agree that during the Exclusivity Period, S1M Group and the Targets shall refrain from entering into, soliciting or participating in any negotiations, discussions, contracts, letters of intent, or other arrangements of any nature with any third party or parties (other than AQSP) regarding a merger, sale, acquisition, liquidation, other disposition, or debt or equity financing of any of the Targets or of any of the Targets' businesses, assets or stock, except dispositions and other actions that are normal, customary or otherwise in the ordinary course of the businesses of the Targets.

17. Termination. S1M Group or AQSP may terminate this Letter of Intent if the Closing does not occur on or before the last day of the Exclusivity Period, provided that the terminating party is not in breach of any of the Binding Provisions (as defined below).

18.  Fees and Expenses. Each Party shall bear its own fees and expenses in connection with the proposed Acquisitions. Without limiting the generality of the foregoing, except as expressly provided in Paragraphs 5 and 6 of this Letter of Intent, each Party shall be solely responsible for the fees and expenses owed to any lawyers, accountants, financial advisors, investment bankers, brokers or other entities and persons employed by such Party.

19. Disclosures. AQSP will be allowed to issue press release(s) regarding this Letter of Intent, which press release(s) shall be acceptable to Meltzer. AQSP shall be permitted to disclose the terms and status of this Letter of Intent, due diligence, Conditions to Closing, and the Acquisitions generally, as may be necessary or desirable in order to comply with applicable securities laws and regulations, and in order to close the Capital Raise and the Acquisitions. S1M Group acknowledge that AQSP is a publicly traded company and that unauthorized disclosure of any material information regarding AQSP, the Targets and/or the Acquisitions, or purchases or sales of AQSP Stock while in possession of material non-public information regarding AQSP, the Targets or the Acquisitions, could subject S1M Group to liability under applicable laws and regulations.

20. Binding Provisions. The following Paragraphs are intended to be legally binding and shall survive the termination of this Letter of Intent (the "Binding Provisions"):

-- Paragraph 5 (payment of WJacobs' and valuation firm's fees)

-- Paragraph 6 (payment of CPAs' fees)

-- Paragraph 8 (operation in ordinary course)

-- Paragraph 9 (good faith efforts to close)

-- Paragraph 16 (exclusivity period)

-- Paragraph 17 (termination)

-- Paragraph 18 (fees and expenses)

-- Paragraph 19 (disclosures)

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Otherwise, this Letter of Intent is intended to be a non-binding undertaking among the Parties to consummate the Acquisitions in accordance with the terms and conditions set forth herein. Nothing in this Letter of Intent shall be construed to require any Party to enter into any further agreements, under any circumstances, and the Parties understand and agree that, except as provided in the Binding Provisions, no legally binding obligations or commitments shall exist unless and until the execution of the Definitive Acquisition Documents. If any provisions of this Letter of Intent shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Letter of Intent, the application of such provision in any other circumstances, or the validity or enforceability of this Letter of Intent.

If the above terms and conditions are acceptable, please confirm the same by executing this Letter of Intent in the spaces indicated below. We look forward to working with you as partners to build a great company together.

Sincerely,

ACQUIRED SALES CORP.

By

Gerard M. Jacobs

President and Chief Executive Officer

	
/s/ Gerard M. Jacobs

	
/s/ William C. Jacobs

	Gerard M. Jacobs	William C. Jacobs

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

SPORTS 1 MARKETING, LLC

 

	
By_/s/ David C. Meltzer

	
 

	David C. Meltzer	
	 Chief Executive Officer	 

 

	
/s/ David C. Meltzer

	
/s/ H. Warren Moon

	David C. Meltzer	H. Warren Moon

	
/s/ Michael Scott Carter

	
/s/ Derek B. Shaw

	Michael Scott Carter	Derek B. Shaw
	AGGREGATED MARKETING PLATFORM INC.	 

 

 

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By_/s/ David C. Meltzer

	

	David C. Meltzer	
	Chief Executive Officer	 

 

PROCESSING FOR A CAUSE INC.

 

	
By_/s/ David C. Meltzer

	

	David C. Meltzer	
	Chief Executive Officer	 

EXHIBITS

Exhibit A --  Terms of Employment Agreements

Exhibit B  --  AMP Acquisition Consideration

  PFAC Acquisition Consideration

Exhibit C -    Management Corp Acquisition Consideration

 

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Exhibit A  --  Employment Agreements

Employer - AQSP and its subsidiaries

Employees - Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs

Term of each Employment Agreement - Not less than 2 years

Health insurance provided by AQSP and its subsidiaries - Comprehensive medical and dental insurance, without any deductibles or co-pays by employee

Titles and base salaries:

Meltzer:

Titles -  Director of AQSP, Co-CEO of AQSP, and CEO of AQSP's subsidiaries AMP and PFAC

Base Salary - Initially $10,000 per month, increasing to not less than $25,000 per month as Employer's cash flow situation reasonably allows

Moon:

Titles -  Co-Chairman of AQSP, President of AQSP, and President of AQSP's subsidiaries AMP and PFAC

Base Salary - Initially $10,000 per month, increasing to not less than $25,000 per month as Employer's cash flow situation reasonably allows

Carter:

Titles -   Executive Vice President of AQSP's subsidiary PFAC

Base Salary - Initially $5,000 per month, increasing to not less than $8,000 per month as Employer's cash flow situation reasonably allows

Shaw:

Titles -  COO of AQSP's subsidiaries AMP and PFAC

Base Salary - Initially $10,000 per month, increasing to not less than $20,000 per month as Employer's cash flow situation reasonably allows

GJacobs:

Titles -   Co-Chairman of AQSP, and Co-CEO and Secretary of AQSP

Base Salary - Initially $10,000 per month, increasing to not less than $25,000 per month as Employer's cash flow situation reasonably allows

WJacobs:

Titles - CFO and Treasurer of AQSP and its subsidiaries

Base Salary - Initially $10,000 per month, increasing to not less than $20,000 per month as Employer's cash flow situation reasonably allows

Bonus pool: 33% of the consolidated pre-tax income of AQSP and its subsidiaries (the "AQSP Consolidated Pre-Tax Income") in excess of $6,000,000 in each calendar year will be allocated to a bonus pool. Such bonus pool will be paid out among the officers of AQSP and its subsidiaries, and other persons who have significantly contributed to the success of AQSP and its subsidiaries, during such calendar year, all as unanimously agreed upon in writing by Meltzer, Moon and GJacobs

Non-exclusive: The Employment Contracts will expressly acknowledge that Meltzer, Moon, Carter, Shaw, GJacobs and WJacobs will continue to be involved as owners, directors, officers, consultants and/or advisors of other companies and to have other outside business interests, but they and their affiliates will be prohibited from competing with AQSP and its subsidiaries

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Exhibit B -- AMP and PFAC Acquisition Consideration

In the Acquisition of AMP via a merger with AMP Acquisition Sub and the Acquisition of PFAC via a merger with PFAC Acquisition Sub:

(1) The aggregate AMP Stock Consideration and PFAC Stock Consideration shall be the number of shares of AQSP Stock described below, shall be delivered by AQSP as described below, and either shall be allocated and paid out among the shareholders of AMP and PFAC as specified in an irrevocable written direction from Meltzer and Moon delivered by them to AQSP no later than 10 business days prior to the Closing (the "AMP/PFAC Stock Distribution Direction") or returned to AQSP for cancellation as described below:

(a) Delivered at Closing: 1,000,000 shares of AQSP Stock, to be allocated and distributed by AQSP at Closing pursuant to the AMP/PFAC Stock Distribution Direction; and

(b) Delivered at Closing into an escrow with an escrow agent mutually acceptable to Meltzer, Moon and GJacobs (the "Escrow Agent"): 1,000,000 shares of AQSP Stock, which either is to be allocated and distributed by the Escrow Agent pursuant to the AMP/PFAC Stock Distribution Direction if but only if the consolidated pre-tax income of AQSP and its subsidiaries (the "AQSP Consolidated Pre-Tax Income") during calendar year 2017, 2018 or 2019, as certified by the CPAs following the completion of the 2017, 2018 or 2019 audit of AQSP, respectively, meets or exceeds $2,000,000 (the "First Milestone"), or which otherwise is to be returned by the Escrow Agent to AQSP for cancellation if the First Milestone has not yet been met following completion of the 2019 audit of AQSP;

(c) Delivered at Closing into an escrow with the Escrow Agent: 2,000,000 shares of AQSP Stock, which either is to be allocated and distributed by the Escrow Agent pursuant to the AMP/PFAC Stock Distribution Direction if but only if the AQSP Consolidated Pre-Tax Income during calendar year 2017, 2018 or 2019, as certified by the CPAs following the completion of the 2017, 2018 or 2019 audit of AQSP, respectively, meets or exceeds $4,000,000 (the "Second Milestone"), or which otherwise is to be returned by the Escrow Agent to AQSP for cancellation if the Second Milestone has not yet been met following completion of the 2019 audit of AQSP; and

(d) Delivered at Closing into an escrow with the Escrow Agent: 2,000,000 shares of AQSP Stock, which either is to be allocated and paid out by the Escrow Agent pursuant to the AMP/PFAC Stock Distribution Direction if but only if the AQSP Consolidated Pre-Tax Income during calendar year 2017, 2018 or 2019, as certified by the CPAs following the completion of the 2017, 2018 or 2019 audit of AQSP, respectively, meets or exceeds $6,000,000 (the "Third Milestone"), or which otherwise is to be returned by the Escrow Agent to AQSP for cancellation if the Third Milestone has not yet been met following completion of the 2019 audit of AQSP; and

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and

(2) The aggregate AMP Cash Consideration and PFAC Cash Consideration shall be as follows:

(a) If and in the event that AQSP makes the $500,000 Loan, then the aggregate AMP Cash Consideration and PFAC Cash Consideration shall be $0 but at Closing S1M shall be reimbursed by AQSP, dollar-for-dollar, for the amount, if any, by which the aggregate amount of out of pocket expenses of the Targets paid by S1M to unaffiliated third parties during the Exclusivity Period exceeds $500,000; and

(b) If and in the event that AQSP does not make the $500,000 Loan for any reason, then the aggregate AMP Cash Consideration and PFAC Cash Consideration shall be $100,000 in cash, delivered by AQSP at Closing, and allocated and paid out at Closing among the shareholders of AMP and PFAC as specified in an irrevocable written direction from Meltzer and Moon delivered by them to AQSP no later than 10 business days prior to the Closing (the "AMP/PFAC Cash Distribution Direction"), and in addition, at Closing S1M shall be reimbursed by AQSP, dollar-for-dollar, for the amount, if any, by which the aggregate amount of out of pocket expenses of the Targets paid by S1M to unaffiliated third parties during the Exclusivity Period exceeds the aggregate amount of any distribution(s) to S1M Group pursuant to Paragraph 8(d).

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Exhibit C - Management Corp Acquisition Consideration

In the Acquisition of Management Corp via a merger with AQSP:

(1) The Management Stock Consideration shall be 1,000,000 shares of AQSP Stock delivered by AQSP at Closing, and allocated and paid out at Closing among the shareholders of Management Corp as specified in an irrevocable written direction from Meltzer, Moon and GJacobs delivered by them to AQSP no later than 10 business days prior to the Closing (the "Management Stock Distribution Direction");

(2) The Management Cash Consideration shall be $100,000 in cash, delivered by AQSP at Closing, and allocated and paid out at Closing among the shareholders of Management Corp as specified in an irrevocable written direction from Meltzer, Moon and GJacobs delivered by them to AQSP no later than 10 business days prior to the Closing (the "Management Cash Distribution Direction").

and

(3) The Management Options and/or Warrants shall be the options and/or warrants to purchase shares of AQSP Stock described below, delivered by AQSP at Closing, and allocated and paid out among the shareholders of Management Corp as specified in an irrevocable written direction from Meltzer, Moon and GJacobs delivered by them to AQSP no later than 10 business days prior to the Closing (the "Management Options and/or Warrants Distribution Direction"):

 

 

	 	 	 	Options and/or
	 	 	 	Warrants Are Not
	Options	
 

	
 

	
Vested and Are Not

	
and/or

	
 

	
 

	Exercisable Unless and
	
Warrants

	
 

	
 

	
Until the AQSP

	Exercisable	
 

	
 

	
Consolidated Pre-tax

	
Into the

	
 

	
 

	
Income During Any

	Following	
Term of

	
Exercise

	
Calendar Year

	
Number of

	
Options and/or

	
Price

	
Between 2016 and

	
Shares of

	
Warrants

	
Per

	
2025 Exceeds

	
AQSP Stock

	
Expires on

	
Share

	
The Following Amount

	
1,000,000

	
12/31/2026

	
$0.50

	
$2,000,000

	2,000,000	
12/31/2026

	
$1.00

	$4,000,000
	
3,000,000

	
12/31/2026

	
$1.50

	$6,000,000
	
 

	
 

	
 

	
 

14EX-10.1

 Exhibit 10.1 

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR U.S. FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE
DATE AND YIELD TO MATURITY WITH RESPECT TO THIS NOTE MAY BE OBTAINED BY WRITING TO BORROWER AT THE FOLLOWING ADDRESS: 2091 STIERLIN COURT, MOUNTAIN VIEW, CA 94043 ATTENTION: CHIEF EXECUTIVE OFFICER FAX NUMBER: (650) 944-7999 

AMENDED AND RESTATED PROMISSORY NOTE 
  

			
	$7,300,000	 	June 21, 2016
		 	Mountain View, CA

 FOR VALUE RECEIVED,
ALEXZA PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), hereby promises to pay to the order of GRUPO FERRER
INTERNACIONAL, S.A., a company organized under the laws of Spain (“Lender”), in lawful money of the United States of America (“Dollars”), the principal sum of Seven Million Three
Hundred Thousand Dollars ($7,300,000) (the “Loan”), or such lesser amount as may be outstanding or advanced from time to time under this Note, together with accrued and unpaid interest thereon, each due and payable on the
dates and in the manner set forth below. Borrower and Lender are parties to that certain Promissory Note, dated as of September 28, 2015 (as heretofore amended, the “Prior Note”) which they desire to amend and restate to
accept the rights and obligations hereof in lieu of their rights and obligations under the Prior Note. 
 1. Principal
Repayment. The outstanding principal amount of the Loan shall be due and payable on September 30, 2016 (the “Maturity Date”). 

2. Interest Rate. Borrower further promises to pay interest on the outstanding principal amount hereof from September 28,
2015 until payment in full, which interest shall be payable at the rate of six percent (6%) per annum. Interest shall compound monthly and be due and payable on demand on the Maturity Date and shall be calculated on the basis of a
365-day year for the actual number of days elapsed. Notwithstanding the foregoing, interest shall accrue from September 28, 2015 upon the First Tranche (as defined below), interest shall accrue from March 21, 2016 on the Second Tranche (as
defined below), interest shall accrue from April 15, 2016 on the Third Tranche (as defined below), interest shall accrue from May 9, 2016 on the Fourth Tranche (as defined below), and interest shall accrue from June 21, 2016 on the Fifth Tranche (as
defined below). 
 3. Place of Payment. All amounts payable hereunder shall be payable at the office of Lender, Av.
Diagonal 549, E-08029 Barcelona, Spain, unless another place of payment shall be specified in writing by Lender. 

  
 1. 

 4. Prepayment. Borrower may prepay this Note at any time without premium or
penalty. 
 5. Application of Payments. Payment on this Note shall be applied first to accrued interest, and thereafter
to the outstanding principal balance hereof. 
 6. Loan Requests. Lender previously made available to Borrower a
loan of Three Million Dollars ($3,000,000) (the “First Tranche”), a second loan of One Million Dollars ($1,000,000) (the “Second Tranche”), a third loan of One Million Dollars ($1,000,000) (the
“Third Tranche”) and a fourth loan of One Million Three Hundred Thousand Dollars ($1,300,000) (the “Fourth Tranche”) of the principal amount indicated on the face of this Note for borrowings by
Borrower. Substantially concurrently with the execution hereof, Lender has made available to Borrower a fifth loan of One Million Dollars ($1,000,000) (the “Fifth Tranche”) of the principal amount indicated on the face of the
Note for borrowings by Borrower. Borrower shall notify Lender by facsimile transmission or telephone no later than 4:00 p.m. Pacific time, four (4) business days prior to the date on which the loan is requested to be made. At the time of any
borrowing under this Note (or at the time of receipt of any payment of principal), Lender shall make or cause to be made, an appropriate notation on the EXHIBIT A attached hereto reflecting the amount of such borrowing (or the
amount of such payment). The outstanding amount of this Note set forth on such EXHIBIT A shall be prima facie evidence of the principal amount thereof outstanding, but the failure to record, or any error in so recording,
shall not limit or otherwise affect the obligations of Borrower to make payments of principal of or interest on this Note when due. Borrower and Lender hereby acknowledge that the initial principal amount outstanding under this Note as of the
date hereof shall be Seven Million Three Hundred Thousand Dollars ($7,300,000), as indicated on the attached EXHIBIT A, and the maximum principal amount of loans under this Note shall not exceed Seven Million Three Hundred
Thousand Dollars ($7,300,000). 
 7. Stock Issuance. As additional consideration for the Loan (as defined under
the Prior Note), the Borrower issued to Lender one-hundred and twenty-five thousand (125,000) shares of Borrower’s common stock, par value $0.0001 per share under the Prior Note. 

8. Default. Each of the following events shall be an “Event of Default” hereunder: 

(a) Borrower fails to pay timely any of the principal amount due under this Note or any accrued interest or other amounts due under this
Note on the date the same becomes due and payable or within ten (10) business days thereafter; 
 (b) Borrower files any petition or
action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate
action in furtherance of any of the foregoing; or 
 (c) An involuntary petition is filed against Borrower (unless such petition is
dismissed or discharged within sixty (60) days) under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or
control of any property of Borrower. 

  
 2. 

 Upon the occurrence of an Event of Default hereunder, all unpaid principal, accrued interest and other amounts
owing hereunder shall, at the option of Lender, and, in the case of an Event of Default pursuant to (b) or (c) above, automatically, be immediately due, payable and collectible by Lender pursuant to applicable law. 

9. Waiver. Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note,
and shall pay all costs of collection when incurred, including, without limitation, reasonable attorneys’ fees, costs and other expenses. 

The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by
law. 
 10. Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the laws of the
State of New York, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. 
 11.
Taxes. Borrower shall deduct and withhold from payments due pursuant to this Note any taxes required to be deducted and withheld under applicable law. Any such withheld taxes shall be timely paid over to the appropriate governmental
authority in accordance with applicable law. To the extent that taxes are deducted and withheld from payments otherwise payable pursuant to this Note, and are paid to the appropriate governmental authority, such deducted and withheld amounts
shall be treated for all purposes of this Note as having been paid to the person in respect of whom such deduction and withholding was made. Borrower shall provide such person with proof reasonably satisfactory to such person of any taxes
withheld and paid to any governmental authority on behalf of such person. On or prior to the date hereof, Lender shall deliver to Borrower (i) two executed originals of the applicable IRS Form W-8, and (ii) to the extent Lender is eligible for
an exemption from or reduction of any otherwise applicable withholding tax, any other applicable documentation required or reasonably requested by Borrower to establish that Lender is entitled to such exemption or reduction. As soon as reasonably
practicable following any transfer by Lender of the Note to an assignee (or any other successor to Lender’s interest in the Note), such assignee or successor, as applicable, shall deliver to Borrower (i) in the case such assignee or transferee
is a United States person (as defined in Section 7701(a)(30) of the U.S. Internal Revenue Code of 1986, as amended, (the “Code”)) (a “U.S. Person”), two executed originals of IRS Form W-9 certifying
that such assignee or successor is not subject to U.S. federal backup withholding, or (ii) in the case such assignee or transferee is not a U.S. Person, (a) two executed originals of the applicable IRS Form W-8, and (b) to the extent such assignee
or transferee is eligible for an exemption from or reduction of any otherwise applicable withholding tax, any other applicable documentation required or reasonably requested by Borrower to establish that such assignee or transferee is entitled to
such exemption or reduction. Lender, its assignees, transferees and Borrower shall use commercially reasonable efforts to establish any applicable exemption from or reduction of otherwise applicable withholding taxes with respect to payments made
hereunder. If any payment hereunder to a non-U.S. Person is subject to Sections 1471-1474 of the Code (“FATCA”), the applicable non-U.S. Person shall provide Borrower with all documentation prescribed by applicable law or
reasonably requested by Borrower in order for Borrower to comply with its obligations under, and determine the amount, if any, of withholding taxes imposed pursuant to FATCA. 

  
 3. 

 12. Original Issue Discount. The “issue price” for the First Tranche
issued pursuant to this Note equaled (i) the face value of the Lender’s interest in the portion of the Loan associated with the First Tranche, minus (ii) the Stock Value (as defined below). Lender and Borrower agree (x) that the portion of the
Loan associated with the First Tranche is part of an investment unit issued within the meaning of Section 1273(c)(2) of the Code, which also includes the stock issued pursuant to Section 7 of this Note, (y) that the allocation provided in this
Section 12 will be used for purposes of Section 1273(c)(2) of the Code and (z) to use the foregoing issue prices for all applicable Tax purposes with respect to this transaction, except as otherwise required by applicable law. Borrower and Bank
agree to make any determinations under Treasury Regulations §1.1273-2(h)(2) consistent with the foregoing and to file all required tax returns consistently with the foregoing, as applicable, except as otherwise required by applicable law.
Lender and Borrower hereby agree (i) that the Stock Value associated with the First Tranche was $143,750.00, (ii) to consistently apply the Stock Value for all tax and information reporting purposes, and (iii) to take no action inconsistent with the
Stock Value for such purposes unless otherwise required by applicable law. 
 13. Mutual Waiver of Jury
Trial. BORROWER AND LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF THIS NOTE OR ANY RELATED DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, INCLUDING CONTRACT, TORT,
BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS NOTE. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 

14. Successors and Assigns. The provisions of this Note shall inure to the benefit of and be binding on any successor to
Borrower and shall extend to any holder hereof, provided however that the right to receive principal and/or interest payments may be assigned or transferred only by (i) surrender of this Note to Borrower and (a) reissuance by Borrower of this Note
to the new holder or (b) issuance by Borrower of a new note to the new holder, or (ii) notification to Borrower of the transfer and a change by Borrower in Borrower’s books and records identifying the new owner of an interest in the principal
or interest on this Note. Borrower shall at all times maintain a book-entry system, which shall reflect ownership of this Note and interests therein. 

  
 4. 

			
	BORROWER:	  	ALEXZA PHARMACEUTICALS, INC.
		
		  	By:  /s/ Thomas B. King                            
                                         
       
		
		  	Printed Name: Thomas B. King                            
                                    
		
		  	Title: President and CEO                              
                                         
    
		
	LENDER:	  	GRUPO FERRER INTERNACIONAL, S.A.
		
		  	By:  /s/ Jorge Ramentol                             
                                         
         
		
		  	Printed Name: Jorge Ramentol                             
                                      
		
		  	Title: CEO                                  
                                         
                        
		
		  	By:  /s/ Juan Fanés                             
                                         
                
		
		  	Printed Name: Juan Fanés                             
                                         
      
		
		  	Title:
CFO                                         
                                         
                

  
 5. 

 EXHIBIT A 

PRINCIPAL BORROWINGS SCHEDULE 

 

							
	 DATE
	 	 BORROWING
	 	 REPAYMENT
	 	 PRINCIPAL
BALANCE

	 SEPTEMBER 28, 2015
	 	$3,000,000	 		 	$3,000,000
	 MARCH 21, 2016
	 	$1,000,000	 		 	$4,000,000
	 APRIL 18, 2016
	 	$1,000,000	 		 	$5,000,000
	 MAY 9, 2016
	 	$1,300,000	 		 	$6,300,000
	 JUNE 21, 2016
	 	$1,000,000	 		 	$7,300,000

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