Document:

RIGHT TO PURCHASE WARRANT AGREEMENT

 

This Right to Purchase Warrant Agreement (this "Agreement") dated as of April 1, 2018, is by and between Acquired Sales Corp. (the "Company") and William C. Jacobs ("Holder"). 

 

Whereas, reference is hereby made to Resolution #4 of that certain Written Consent of the Board of Directors of the Company effective as of November 28, 2014 ("Resolution #4"), which Resolution #4 references Attachment B ("Attachment B") to that certain Letter of Intent dated November 28, 2014 between the Company, Gerard M. Jacobs, Vincent J. Mesolella, PPV, Inc., James Thuney and Joseph Thuney (the "PPV LOI"); and 

Whereas, the common stock of the Company ("Stock") has closed at not less than $3.50 per share on at least ten consecutive trading days on which shares of Stock have traded since November 28, 2014; 

Now, Therefore, In consideration of Holder's service as an employee of the Company, and in consideration of other valuable consideration the receipt and sufficiency of which is hereby acknowledged by the Company, the Company hereby agrees as follows, intending to be legally bound hereby: 

1. Holder or his designee(s) shall have the right to purchase from the Company, for an aggregate purchase price of $1.00, at any time or from time to time during the period from the date of this Agreement through December 31, 2024: 

Warrants to purchase an aggregate of 210,000 shares of Stock, at an exercise price of $0.01 per share, such warrants to be exercisable on or prior to December 31, 2024, and to be in a form consistent with the Form of Common Stock Purchase Warrant attached hereto as Attachment A. 

In Witness Whereof, the Company has executed and delivered this Agreement as of the date first written above. 

ACQUIRED SALES CORP.

By /s/ Gerard M. Jacobs

Gerard M. Jacobs, Chief Executive Officer 

 

/s/ William C. Jacobs

William C. Jacobs

 

 

 

 

 

 

 

 

 

 

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ATTACHMENT A

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

	Warrant No. ________

	Right to Purchase 210,000 shares of Common Stock of Acquired Sales Corp. (subject to adjustment as provided herein)

 

FORM OF COMMON STOCK PURCHASE WARRANT

Issue Date: ___________________ 

ACQUIRED SALES CORP., a corporation organized under the laws of the State of Nevada (the “Company”), hereby certifies that, for value received, _______________________ or his assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time commencing after the Issue Date of this Common Stock Purchase Warrant (the “Warrant”) until 5:00 p.m., E.S.T on the date that is December 31, 2024 (the “Expiration Date” and, said period during which this Warrant is exercisable being referred to herein as the “Exercise Period”), up to 210,000 fully paid and nonassessable shares of Common Stock at a per share purchase price of $0.01. The aforedescribed purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the "Purchase Price."  The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

 

As used herein the following terms, unless the context otherwise requires, have the following respective meanings: 

(a)The term “Company” shall include Acquired Sales Corp., a Nevada corporation and any corporation or other entity which shall succeed or assume the obligations of Acquired Sales Corp. hereunder.  

(b)The term “Common Stock” includes (a) the Company's Common Stock, $0.001 par value per share, as authorized on November 28, 2014, and (b) any other securities into which  

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or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c)The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities.  

(d)The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.  

1.Exercise of Warrant. 

1.1.Number of Shares Issuable upon Exercise.  From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 3. 

1.2.Full Exercise.  This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect.  The original Warrant is not required to be surrendered to the Company until it has been fully exercised.  

1.3.Partial Exercise.  This Warrant may be exercised in part (but not for a fractional share) by delivery of a Subscription Form in the manner and at the place provided in subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise provided the Holder has surrendered the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, for the whole number of shares of Common Stock for which such Warrant may still be exercised. 

1.4.Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the "Determination Date") shall mean:  

(a)If the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange, the American Stock Exchange, LLC, (hereinafter referred to as “National Exchanges”) then the average of the closing or last sale prices, respectively, reported for the ten trading days immediately preceding the Determination Date; 

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(b)If the Company's Common Stock is not traded on one or more National Exchanges as set out above, the average of the closing bid prices reported for the ten trading days immediately preceding the Determination Date; 

(c)Except as expressly provided in clause (d) below or elsewhere in this Warrant, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided with such arbitration to be conducted in Chicago, Illinois; or 

(d)If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of the Warrant are outstanding at the Determination Date. 

1.5.Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 

1.6.Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the Holder of the Warrant pursuant to Subsection 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1.  

 1.7Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which delivery of a Subscription Form shall have occurred and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within fourteen (14) business days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, (but not any fractional shares).  The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder.  The Company shall not, however, be responsible for any out of pocket or potential lost profits as a result of a decline in stock price during any reasonable delay.   

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Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant.  

2.Cashless Exercise. 

(a)This Warrant may be exercised in whole or in part during the Exercise Period (i) by paying cash, wire transfer or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Purchase Price, (ii) by “cashless exercise” method by delivery of Common Stock issuable upon exercise of the Warrant in accordance with Section (b) below or (iii) by a combination of any of the foregoing methods, for the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. 

(b)Subject to the provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Purchase Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being cancelled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Subscription Form in which event the Company shall issue to the holder a number of shares of Common Stock computed using the following formula: 

X=Y (A-B) 

          A 

 

WhereX=the number of shares of Common Stock to be issued to the holder 

 

Y=the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) 

A=the average of the closing sale prices of the Common Stock for the ten (10) Trading Days immediately prior to (but not including) the Exercise Date, or Fair Market Value, whichever is less 

B=Purchase Price (as adjusted to the date of such calculation) 

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the

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Subscription Agreement, regardless of whether subsequent changes or modifications have been made to this Warrant or the exercise price.

3.Adjustments 

3.1.Forward or Reverse Split. The Company effectuating a forward or reverse split of its Common Stock shall have the identical effect on the Warrant as such a split would have on shares of common stock.  

3.2.Dissolution.  In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of the Warrant after the effective date of such dissolution pursuant to this Section 3 to a bank or trust company (a "Trustee") having its principal office in California or Illinois as trustee for the Holder of the Warrant.  Such property shall be delivered only upon payment of the Warrant exercise price.   

3.3.Continuation of Terms.  Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4.  In the event this Warrant does not continue in full force and effect after the consummation of the transaction described in this Section 3, then only in such event will the Company's securities and property (including cash, where applicable) receivable by the Holder of the Warrant be delivered to the Trustee as contemplated by Section 3.2.  

4.Certificate as to Adjustments.  In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 9 hereof). 

 

5.Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.   The Company will at all times reserve and keep available, solely for issuance and delivery on the  

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exercise of the Warrant, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.  This Warrant entitles the Holder hereof to receive copies of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock. 

6.Assignment; Exchange of Warrant.  Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor"). On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form") and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. 

7.Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at the Holder’s expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

8.Representations of the Holder. The Holder represents and warrants to the Company that the Holder is a fully qualified "accredited investor" and has read and understands all of the Company's filings with the U.S. Securities and Exchange Commission, including the "Risk Factors" described therein, and that the Holder agrees and acknowledges that this Warrant is subject to compliance with all applicable securities laws including the completion of all necessary filings in regard hereto. 

9.Warrant Agent.  The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 6, and replacing this Warrant pursuant to Section 7, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.  

10.Transfer on the Company's Books.  Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.  

11.Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, or email with confirmation, addressed as set forth below or to such other address as such party shall have 

 

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specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be: (i) if to the Company to: Acquired Sales Corp., 31 N. Suffolk Lane, Lake Forest, Illinois 60045, Attn: Gerard M. Jacobs, or current CEO, phone number (847) 915-2446, with a copy to the Company's legal counsel, and (ii) if to the Holder, to the name, address, facsimile number and email address set forth in the notice of transfer and assignment provided by Holder to the Company (provided that such notice is with confirmation).  

 

12.Law Governing This Warrant.  This Warrant shall be governed by and construed in accordance with the laws of the State of Illinois without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of Illinois or in the federal courts located in the State of Illinois.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The Company and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other transaction document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. 

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. 

ACQUIRED SALES CORP. 

 

By 

Gerard M. Jacobs, CEO 

 

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Exhibit A

 

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

 

TO:  ACQUIRED SALES CORP. 

 

The undersigned, pursuant to the provisions set forth in the attached Warrant No. _____________ (transferred and assigned), hereby irrevocably elects to purchase (check applicable box):

 

___________ shares of the Common Stock covered by such Warrant; or 

___the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. 

 

The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $___________.  Such payment takes the form of (check applicable box or boxes):

 

___$__________ in lawful money of the United States; and/or 

___the cancellation of such portion of the attached Warrant as is exercisable for a total of _______ shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or 

 

___the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2. 

 

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ____________________________________________________________________ whose address is _________________________________________________         

 

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from registration under the Securities Act.

 

Dated:____________________________________________________________ 

(Signature must conform to name of holder as specified on the face of the Warrant) 

 

_________________________________________ 

_________________________________________ 

(Address)  

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Exhibit B

 

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant No. ____________ (transferred and assigned) to purchase the percentage and number of shares of Common Stock of ACQUIRED SALES CORP. to which the within Warrant No. _____________ relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of ACQUIRED SALES CORP. with full power of substitution in the premises.

 

	Transferees

	Percentage Transferred

	Number Transferred

	 

	 

	 

	 

	 

	 

	 

	 

	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page TenSECURITY AGREEMENT

 

 

THIS SECU RITY AGREEMENT (this "Agreement") is made and entered into as of July 16, 2018, by and between Acquired Sales Corp., a Nevada corporation, whose address is 31 N. Suffolk Lane, Lake Forest, Illinois 60045 ("Debtor"), and Joshua A. Bloom ("Bloom") and Gerard M. Jacobs ("Jacobs") (Bloom and Jacobs collectively, the "Secured    Parties"). 

 

WHEREAS, Debtor has duly authorized, executed, and delivered to each of   Bloom and Jacobs a certain Demand Promissory Note of even date herewith payable by Debtor to Bloom and Jacobs respectively (collectively, as the same may be amended, modified, or extended from time to time (the "Notes"); and 

 

WHEREAS, to induce the Secured Parties to advance or continue to advance loan proceeds to Debtor under the Notes, Debtor hereby agree to execute this Agreement with the Secured Parties, and pursuant hereto to grant to and   create in favor of the Secured Parties a first priority security interest in and lien upon all assets and rights of Debtor, as hereinafter provided; and 

 

NOW, THEREFORE, in consideration of and as an inducement to the Secured Parties to advance or continue to advance loan proceeds under the Notes, the parties hereto, intending to be legally bound, covenant and agree as follows: 

 

1. CERTAIN DEFINITIONS. In addition to the words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires: 

 

"Code " means the Uniform Commercial Code of the State of Nevada, as in effect on the date hereof and as amended from time to time hereafter. 

 

"Collateral" means all personal property of Debtor, including, without limitation, all of the following items, whether now owned or now due, or in which Debtor have an interest or hereafter, at anytime in the future, acquired, arising or to become due, or in which Debtor obtain an interest, and all products, proceeds, replacements, substitutions and accessions of or to any of the following, which to the extent not defined below, shall have the meanings given to them under the Code:(a) all accounts and accounts receivable; (b) all inventory (including raw materials, work-in-process, finished goods and supplies); (c) all contract rights, including contract rights pursuant to leases of real estate; (d) all general intangibles (including, without limitation, payment intangibles, software, trademarks, patents, patents pending, copyrights, service marks, or other intellectual property rights of Debtor); (e) all equipment (including all machinery, furniture, and fixtures); (f) all farm products; (g) all goods; (h) all chattel paper (whether tangible or electronic); (i) all  fixtures; (j) all investment property (including, without limitation, all  financial assets, certificated and uncertificated securities, securities accounts and security entitlements); 

(k) all letter-of-credit rights; (l) all rights under judgments , all commercial tort claims, and choses in action; (m) all books, records and information relating to the Collateral and/or to the operation of Debtor' businesses and all rights of access to such books, records and information and all property in which such  books, records and information are stored, recorded and maintained; (n) all instruments, promissory Notes, documents of title, documents, policies and certificates of insurance, securities, deposits, deposit accounts, money, cash or other property; (o) all federal, state and local tax refunds and/or abatements to which the  Debtor are or becomes entitled no matter how or when arising, including, but not limited to, any loss carryback tax refunds; (p) all insurance proceeds, refunds and premium  rebates,  including  without limitation proceeds of fire and credit insurance, whether any of such proceeds, refunds and premium rebates arise out of any of the foregoing (a-o) or otherwise; and (q) all liens, guaranties, rights, remedies and privileges pertaining to any of the foregoing (a-p), including the right of stoppage in transit.

 

"Event(s) of Default " means any default or breach of the terms, conditions or  

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covenants of this Agreement, or any default under the Notes.

 

"Obligations" means: (a) all indebtedness  of  the  Debtor  to the  Secured  Parties arising on or after the date hereof under the Notes, both principal and interest, and any and all extensions, renewals, refinancings or refundings, in whole or in part, thereof; (b) all     indebtedness of Debtor to the Secured Parties for reasonable fees and expenses arising in connection with the Notes, including, without limitation, reasonable attorneys' fees and legal and other expenses paid or incurred by the Secured Parties in connection with the collection of the amounts due hereunder or under the Notes; (c) all future advances made by the Secured Parties for the protection or preservation of the Collateral or any portion thereof, including, without limitation, advances for storage and transportation charges, taxes, insurance, repairs and the like, when and as the same become due,  whether  at maturity or by declaration, acceleration or otherwise, or, if now due, when payment thereof shall be demanded by the Secured Parties; and (d) all other obligations and liabilities, of every kind  and  description, direct  or  indirect, absolute or contingent, due or to become due, regard less of how they arose or were acquired, now existing or hereafter arising by Debtor to the Secured Parties. 

 

"Permitted Liens " means: (a) warehousemen 's, mechanics ', carriers' and other similar liens arising by operation of law in the ordinary course of Debtor's businesses; (b) liens in favor of the Secured Parties; and (c) purchase money security interests in tangible personal property purchased or leased by Debtor where the security interest covers only such property and secures only the cost thereof and which do not exceed $100,000 in the aggregate at any time. 

 

"Person" means an individual, entity, corporation, partnership, limited partnership, limited liability company, limited liability partnership,  joint venture, trust, or unincorporated organization, or a government or any agency or political subdivision thereof. 

 

2. SECURITY INTEREST. As security for the full and  timely  payment  and performance of the Obligations in accordance with the terms thereof and of the instruments now or hereafter evidencing the Obligations, Debtor, on the terms set forth in this Agreement, hereby grant to the Secured Parties, under the Code, a continuing security interest in and a lien on the Collateral. In addition to all the rights given to the Secured Parties by this     Agreement and the Notes, the Secured Parties shall have all the rights and remedies of a  Secured Party under the Code. In connection with the grant of security interest made hereby, Debtor hereby authorize the Secured Parties to file or cause to be filed one or more financing statements, amendments to financing statements, continuations to  financing statements, and/or in lieu financing statements with any filing or recording office for the purpose of perfecting or continuing the perfection of the security interest  in the Collateral. 

 

3. PRINCIPLES APPLICABLE TO THE COLLATERAL. The parties agree that, at all times during the term of this Agreement, the following provisions shall be applicable to the  Collateral: 

 

(a) Debtor covenants and agrees that it will keep accurate and  complete books and records concerning the Collateral in accordance with GAAP. 

 

(b) The Secured Parties shall have the right to review the books and records of Debtor pertaining to the Collateral and to copy and make excerpts therefrom, all at such times and as often as the Secured Parties may reasonably request. 

 

(c) Debtor shall maintain and keep (i) its principal place of business and its chief executive offices, (ii) their records concerning  the  Collateral, and  (iii) the Collateral, at the address for Debtor set forth in the preamble hereto, but at no other location, without the prior written consent of the Secured Parties. 

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(d) Notwithstanding the  security  interest  in  the Collateral granted to and created  in favor of the Secured Parties under this Agreement, Debtor shall have the right, until  one or more Events of Default shall occur, to sell, lease or otherwise dispose of  the  Collateral, provided  that  any  such  disposition  shall  be  in  the  ordinary course of Debtor's business. Any disposition outside of the ordinary course of Debtor's business shall require the prior written consent of Secured Parties. 

 

(e) Notwithstanding the security interest in the Collateral granted to and created in favor of the Secured Parties under this Agreement, Debtor shall have the right, until such time as the Secured Parties shall have notified Debtor that Secured Parties have  revoked such right based upon an Event of Default, at their own cost and expense to collect any and all accounts of Debtor comprising the Collateral (the "Accounts"). 

 

(f) The Secured Parties shall  have the right after an  Event of Default has occurred  (i) to revoke the right of Debtor granted under subsection (e) of this Section 3 by written  notice  to Debtor to such effect, (ii) to take over and direct collection of any and all Accounts of Debtor, (iii) to give notice of the Secured  Parties' security  interest  in  such  Accounts to  any or all Persons obligated  to the  Debtor thereon, (iv) to direct such Persons to make payment of such Accounts directly to the  Secured  Parties  and  (v) to  take  control  of  such  Accounts  and  any  proceeds thereof. 

 

(g) The Secured Parties shall have the right after an Event of Default to cause a non­ interest bearing bank account entitled "Cash Collateral Account" (the "Collateral Account") to be opened and maintained for Debtor at any office or branch of Debtor' bank within the State of Illinois.  All cash proceeds received by the Secured Parties from Debtor pursuant to subsection (h) of this Section 3 or directly from Persons obligated on Accounts pursuant to subsection (f) of this Section 3 shall be deposited in the Collateral Account as further security for the payment of the Obligations. The Secured Parties shall have sole dominion and control over all funds deposited in the Collateral Account, and such funds may be withdrawn therefrom only by the Secured Parties. 

 

(h) Upon notice by the Secured Parties to Debtor that the Collateral Account has been opened in accordance with subsection (g) of this Section 3, Debtor shall    cause all cash proceeds collected by them to be delivered to the Secured Parties forthwith upon receipt, in the  original  form in which  received,  bearing  such endorsements  or  assignments  by  the  Debtor  as  may be necessary to permit collection thereof by the Secured  Parties, and  for such purpose  the  Debtor  hereby irrevocably authorize and  empower  the Secured  Parties, their officers, employees and authorized agents, to endorse and sign the names of Debtor on all checks, drafts,  money  orders   or  other media of payment so delivered and such endorsements  or  assignments  shall, for  all  purposes,  be  deemed  to  have  been made by  the Debtor  prior  to  any  endorsement  or  assignment  thereof  by  the Secured  Parties. The Secured Parties may use any convenient  or customary means for the purpose of collecting such checks, drafts, money orders or other media of payment. 

 

4. CERTAIN COVENANTS. Until payment and performance in full of the Obligations, Debtor agrees, represents, warrants and covenants that: 

 

(a) Debtor has and will have good and marketable title to the Collateral from     time to time owned or acquired by Debtor, free and clear of all liens, encumbrances   and security interests, except security interests granted to and created in favor of the Secured Parties and except for the Permitted Liens. Debtor shall defend such title against the claims and demands of all Persons. 

 

(b) Debtor shall not, without the prior written consent of the Secured Parties, (i) borrow against the Collateral, the Excluded Property, or any real property now or in the future owned or leased by Debtor ("Debtor Assets") from any Person,  other than the Secured Parties and other than as permitted in the Notes, (ii) create, incur, assume or suffer to exist any mortgage, lien, charge or encumbrance on, or security interest in, or pledge of or conditional sale or other title retention  agreement with respect to any of Debtor Assets, except the security interest created  

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hereunder and the Permitted  Liens, (iii) permit any levy or attachment  to be made against any of Debtor Assets except a levy or attachment relating to  this Agreement, (iv) permit any financing statement to be on file with respect to any of Debtor Assets, except financing statements in favor of the Secured Parties and except financing statements pertaining to the Permitted Liens, or (v) permit any transfer of Debtor Assets without the consent of the Secured Parties, except as may be expressly permitted hereunder.

 

(c) Debtor shall faithfully preserve and protect  the  Secured  Parties'  security interest  in  the  Collateral  and  shall,  at  their  own  cost  and  expense,  cause  said security  interest  to  be  perfected and  continued  perfected, and  for such  purpose, the  Debtor  shall  from  time  to  time  at  the  request  of  the  Secured  Parties  file or record, or cause to be filed or recorded, or authorize the Secured Parties to execute and  file or record,  such  instruments,  documents and  notices,  including, without limitation, financing statements and continuation statements, as the Secured Parties may deem necessary or advisable i n order to perfect and continue perfected  said security  interest. Debtor shall do all such other acts and things and execute and deliver all  such   other instruments and  documents, including, without limitation, further security agreements, pledges  and assignments, as the  Secured Parties  may  reasonably  deem necessary or advisable  from time to time in order to perfect  and preserve  the  priority  of said  security  interest  as a first lien security interest  in the Collateral  prior to the  rights of all Persons therein  or thereto. The Secured Parties  are hereby  appointed  attorney-in-fact  for the  Debtor  to do all  acts and  things  which  they may  deem  necessary  or advisable  to  preserve, perfect  and continue   perfected  Secured Parties'  security  interest in the Collateral, including,  without limitation, the signing and recording of financing and other similar statements. 

 

(d) Risk of loss of, damage to or destruction of the Collateral is on Debtor. Debtor shall insure the Collateral against such risks and casualties and in such amounts and with such insurers as acceptable to Secured Parties in their reasonable discretion. All such policies of insurance shall contain loss payable clauses in favor of Debtor and the Secured Parties as their respective interests may appear, and show Secured Parties as an additional insured on the l iability portion of said policy, and such policies or certificates evidencing the same shall be deposited with the Secured Parties immediately upon the request of the Secured Parties. If Debtor fail to effect and keep in full force and effect such insurance or fails to pay the premiums thereon when due, the Secured Parties may do so for the account of Debtor and add the cost thereof to the Obligations. Debtor hereby assigns and sets over unto the Secured Parties all monies which may become payable on account of such insurance, including, without limitation, any return of unearned premiums which may be due upon cancellation of any such insurance, and authorizes the Secured Parties to direct the insurers to pay the Secured Parties any amount so due. The Secured Parties, their officers, employees and authorized agents, are hereby irrevocably appointed attorney-in-fact of Debtor to endorse any draft or check which may be payable to Debtor in order to collect the proceeds of such insurance or any return of unearned premiums. Such proceeds shall be applied to the payment or prepayment of the Obligations. Any balance of insurance proceeds remaining in the possession of the Secured Parties after payment in full of the Obligations shall be paid to Debtor or order. 

 

(e) Debtor assumes full responsibility for taking any and all necessary action to preserve its rights in the Accounts against account Debtor. The Secured Parties   shall be deemed to have exercised reasonable care in the custody and  preservation of such of the Collateral as may be in their possession if they takes such  action for that purpose as Debtor shall request in writing, provided that such  requested action shall not, in the reasonable judgment of the Secured Parties, impair the Secured Parties' security interest in the Collateral or their rights in, or the value of, the Collateral, and provided further that such written request is received by the Secured Parties in sufficient time to permit it to take the requested action. 

 

(f) Debtor shall maintain each item of Collateral in good condition and repair and shall pay and discharge all taxes, levies and other impositions levied or    assessed thereon as well  

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as the cost of repairs to or maintenance of the same. If  Debtor fail to do so, the Secured Parties may pay the cost of such repairs or maintenance and such taxes, levies or other impositions for the account of Debtor and add  the amount thereof to the Obligations.

 

(g) Whenever Debtor shall acquire mortgageable real property, Debtor shall report such acquisition to the Secured Parties at least five days before consummating such acquisition and shall execute and deliver, and have recorded, a mortgage agreement in favor of the Secured Parties which shall contain   substantially identical covenants, agreements, and restrictions with regard to   such real property as are contained in this Agreement relating to personal  property, and any other agreements, instruments, documents and papers as the Secured Parties may request to grant the Secured Parties a security interest in such real property. 

 

5. EVENTS OF DEFAULT. 

 

(a) lf one or more Events of Default shall occur, then, and in any such event, the Secured Parties may forthwith proceed to exercise any one or more of the rights and remedies afforded a Secured Party by the Code and such other rights and  remedies which they may have at Law or in equity, under this Agreement or the  Notes, all of which rights and remedies shall be cumulative to the full extent   permitted by law. Without limitation upon the foregoing, the Secured Parties shall   have the right without demand or prior notice to Debtor or any other Person, except as otherwise required by law (and if notice is required by Law, after ten (10) days' prior written notice to Debtor at its address hereinafter set forth) and without prior judicial hearing or legal proceedings, all of which Debtor  hereby expressly waives: 

 

(i) to enter any premises where Collateral is located and to take possession  and control of the same; 

 

(ii) to enforce collection, at Debtor's expense and either in the name of the Secured Parties or the name of Debtor, of any or all of the Accounts by suit or otherwise, to surrender, release or exchange all or any part thereof, or to compromise or extend or renew (whether or not longer than the original period) any indebtedness thereunder to the extent it is commercially reasonable to do so; 

 

(iii) to take over and perform any  contract  of Debtor and  to take control  of any and all Accounts and proceeds arising therefrom; 

 

(iv) to sell all or any portion of the Collateral at public or  private sale at such place or places and at such time or times and in such manner and upon such terms, whether for cash or credit,as the Secured Parties in their sole discretion may determine; and 

 

(v) to endorse in the name  of Debtor  any  instrument,  howsoever received by the Secured Parties, representing proceeds of any of the Collateral. 

 

The Secured Parties shall apply the proceeds of any sale or other disposition of any  realization of  the  Collateral   first  to  the  payment  of  the  reasonable  costs   and expenses  incurred  by  the  Secured  Parties  in  connection  with  such  sale or  other disposition   or  realization,  including   reasonable   attorneys'   fees   and   legal expenses,  second  to  the  repayment  of  the  Obligations  to  the  Secured  Parties, whether  on account of principal  or interest or  otherwise as the Secured  Parties  in their sole discretion  may  elect, and  then  to the  payment  of the balance, if any, as required  by  law. If the proceeds  of  any  such  sale  or  other  disposition  of  the Collateral   are   insufficient   to   pay   the  Obligations   and   the   Secured   Parties' reasonable costs hereunder, Debtor shall be liable for any deficiency.

 

(b) Upon the occurrence of any Event of Default, Debtor shall promptly upon  demand by the Secured Parties assemble the Collateral and make it available to the Secured Parties at a place to be designated by the Secured Parties which shall be   reasonably convenient to both  

5

parties. The right of the Secured Parties under this Section to have the Collateral assembled and made available to it is the essence     of this Agreement, and the Secured Parties may, at their election, enforce such right   by a bill in equity for specific performance.

 

6. DEFEASANCE. Upon payment and performance in full of the Obligations, this Agreement shall terminate and be of no further force or effect. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 

 

7. SUBROGATION AND MARSHALING. Debtor hereby  waives, surrenders  and agrees not to claim or enforce, so long as the Obligations or any portion thereof remains outstanding, (a) any right to be subrogated in whole or in part to any right or claim of the holder of any part of the Obligations and (b) any right to require marshaling of any assets of Debtor which right of subrogation or marshaling might otherwise arise from any payment to the holder of any part of the Obligations arising out of the enforcement of the security interest granted hereby, or any other mortgage or security interest granted by Debtor or any other Person to the Secured Parties, or the liquidation of or the realization upon the Collateral, any other collateral granted by Debtor or any other Person to the Secured Parties, or any part thereof. 

 

8.  PLEDGE AND HYPOTHECATION. Without limiting the generality of any other provision of this Agreement, Debtor hereby agrees to pledge, hypothecate and deliver to Secured Parties, as further collateral and security for the Notes, the note payable by the William Noyes Webster Foundation to Debtor. 

 

9. MISCELLANEOUS. 

 

(a) Severability. If any provision of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid or  unenforceable provision had never been contained herein; and Debtor and the  Secured Parties shall negotiate in good faith to modify this Agreement so as to   effect the original intent of this Agreement as closely as possible in an acceptable   manner so that the transactions contemplated hereby and the allocation of  economic benefits contemplated hereunder are fulfilled to the maximum extent  possible. 

 

(b) No Waiver; Rights Cumulative. No failure or delay on the part of the Secured Parties in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or of any other right, remedy, power or privilege. The rights and remedies of the Secured Parties under this Agreement are cumulative and not exclusive of any rights or remedies which they may otherwise have. No modification or waiver of any provision of this Agreement nor consent to any departure by Debtor therefrom shall be   effective unless the same shall be in writing, and then such waiver or consent   shall be effective only in the specified instance and for the specific purpose for  which given. 

 

(c) Notices.   Any   notice, request,  demand   or  other   communication   required   or permitted  hereunder shall be given in writing by delivering the same in person  to the  intended  addressee,  by  overnight  courier  service  with  guaranteed  next  day delivery  or  by  certified  United  States  Mail, postage  prepaid  and  return  receipt requested,  sent to  the  intended  addressee at the  applicable  address set  forth  on Page  1 hereof or to such different address as either Debtor or Secured Parties shall have designated  by written  notice to the other sent in accordance herewith. Such notices shall be deemed given when received  or, if earlier, in the case of delivery by  courier  service with  guaranteed  next  day  delivery,  the  next  day  or  the  day designated for delivery, or in the case of delivery by certified United  States mail, five days after deposit therein. 

 

(d) Construction.  Unless  the  context  of this  Agreement  otherwise  clearly   

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requires, references  to the plural  include the singular, the singular the  plural, and the part the  whole,   and   "or"  has  the   inclusive  meaning   represented   by   the  phrase "and/or." The words  "hereof," "herein,"  "hereunder" and  similar  terms  in  this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The section and other headings  contained  in  this Agreement are for reference purposes only and shall not control or affect the construction  of this  Agreement  or the  interpretation  hereof  in  any  respect.  Section, subsection and exhibit references are to this Agreement unless otherwise specified.

 

(e) Counterparts. This Agreement may be in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one instrument. In the event that any signature is delivered by facsimile transmission or by email delivery of a PDF format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or PDF signature  page were an original. 

 

(f) Governing Law. The Code shall govern the attachment, perfection  and the effect of attachment and perfection of the Secured Parties' interest in the Collateral, and the rights, duties and obligations of Debtor and the Secured Parties with respect   thereto. This Agreement shall be deemed to be a contract under the laws of the   State of Illinois, and the execution and delivery hereof  and, to the extent not inconsistent with the preceding sentence, the terms and provisions   hereof, shall be governed by and construed in accordance with the laws of the State of Illinois. 

 

(g) Survival. All representations, warranties, covenants and agreements contained herein or made in writing in connection herewith shall survive the execution and  delivery of this Agreement and the extension of the Loan. 

 

IN WITNESS WHEREOF, the parties have executed this Agreement under seal the day and year first above written.

 

ACQUIRED SALES CORP.

 

 

By /s/ Richard E. Morrissy

Richard E. Morrissy, Director

 

Pursuant to a unanimous consent of the Audit Committee, the Compensation 

Committee, and the full Board of Directors of Acquired Sales Corp. given on July 12 and 13, 2018 (the "Unanimous Consent"), and further

 

Pursuant to approval of Richard E. Morrissy, representing the Compensation Committee and the full Board of Directors of Acquired Sales Corp. as provided in the Unanimous Consent, given on July 14, 2018

 

 

 

/s/ Joshua A. Bloom

Joshua A. Bloom

 

 

 

/s/ Gerard M. Jacobs

Gerard M. Jacobs

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