Exhibit 10.1

STOCK PURCHASE AGREEMENT

dated as of December 22, 2020

among

1847 WOLO INC.,

WOLO MANUFACTURING CORP.,

WOLO INDUSTRIAL HORN & SIGNAL, INC.,

BARBARA SOLOW,

AND

STANLEY SOLOW

TABLE OF CONTENTS

Disclosure Schedule

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of December 22, 2020 (the “Agreement”), among 1847 Wolo Inc., a Delaware corporation (the “Buyer”), Wolo Manufacturing Corp., a New York corporation and Wolo Industrial Horn & Signal, Inc., a New York corporation (each, a “Company” and together, the “Companies”), Barbara Solow and Stanley Solow, as the shareholders of the Companies (each, a “Sellers” and together, the “Sellers”) and Stanley Solow, in his capacity as the “Seller Representative” (as defined in Section 10.15). The Buyer, the Companies, the Sellers and the Seller Representative may each be referred to herein individually as a “Party” or together as the “Parties”.

BACKGROUND

The Sellers are collectively the record and beneficial owner of 100% of the issued and outstanding shares of capital stock of the Companies on a fully-diluted basis (the “Shares”). The Sellers desire to sell all of the Shares to the Buyer, and the Buyer desires to purchase all of the Shares from the Sellers, upon the terms and subject to the conditions set forth in this Agreement (such sale and purchase of the Shares, the “Acquisition”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the Parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1 Certain Definitions.

(a) When used in this Agreement, the following terms will have the meanings assigned to them in this Section 1.1(a):

“Action” means any claim, action, suit, inquiry, hearing, proceeding or other investigation.

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with, such Person. For purposes of this definition, “Control” (including the terms “Controlled by” and “under common Control with”) means possession of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock, as trustee or executor, by Contract or otherwise.

“Benefit Plan” means any “employee benefit plan” as defined in ERISA Section 3(3), including any (a) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in ERISA Section 3(37)), (d) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material fringe benefit plan or program, or (e) stock purchase, stock option, severance pay, employment, change-in-control, vacation pay, company award, salary continuation, sick leave, excess benefit, bonus or other incentive compensation, life insurance, or other employee benefit plan, contract, program, policy or other arrangement, whether or not subject to ERISA, under which any present or former employee of the Companies have any present or future right to benefits sponsored or maintained by the Companies or any ERISA Affiliate.

“Business” means the research and development, design, manufacture, assembly, production, marketing, distribution, sale, and repair of horns and horn accessories, including those for general purpose, automotive, marine, truck, motorcycle and industrial applications as replacement or specialty accessory purposes, on-board systems and accessories, back-up alarms, warning lights, emergency lights, light bars, hide away lights, sirens and public address systems, speakers, and other automobile accessories.

“Business Day” means a day other than a Saturday, Sunday or other day on which banks located in New York, NY are authorized or required by Law to close.

“Closing Working Capital” means the Net Working Capital as reflected on the Closing Date Balance Sheet determined in accordance with OCBOA.

“Code” means the Internal Revenue Code of 1986, as amended.

“Contract” means any written agreement, contract, commitment, arrangement or understanding.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person who is, or at any time was, a member of a “controlled group of corporations” together with either Company within the meaning of Section 414(b) or (c) of the Code and, for the purpose of Section 302 of ERISA and/or Section 412, 4971, 4977, 4980D, 4980E and/or each “applicable section” under Section 414(f)(2) of the Code, within the meaning of Section 412(n)(6) of the Code that includes, or at any time included, the Companies or any Affiliate thereof, or any predecessor of any of the foregoing.

“Escrow Agreement” means that certain escrow agreement, dated as of the Closing Date, among the Parties and the Escrow Agent, in a form to be agreed among the Parties and the Escrow Agent.

“Escrow Agent” means JPMorgan Chase Bank.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Governmental Entity” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state or local government or foreign, international, multinational or other government, including any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof.

“Indebtedness” means (a) any obligations relating to indebtedness for borrowed money, (b) any obligations evidenced by bonds, notes, debentures or similar instruments or (c) the principal or face amount of banker’s acceptances, surety bonds, performance bonds or letters of credit (in each case whether or not drawn), (c) all obligations to pay the deferred purchase price of property or services, (d) all capital lease obligations, (e) all obligations or liabilities of others secured by a Lien on any asset, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others that are guaranteed, and (g) any other obligations or liabilities which are required by U.S. Generally Accepted Accounting Principles to be shown as debt on the balance sheet; provided, however, that the PPP Loan shall not be treated as Indebtedness hereunder in any respect.

“Independent Accounting Firm” means any nationally recognized independent registered public accounting firm which has not represented any of the Parties or any of their respective Affiliates for the past five years as will be agreed by the Seller Representative and the Buyer in writing.

“Inventory Value” means the amount attributed to the value of the Inventory by the mutual agreement of the Parties pursuant to Section 6.12 of this Agreement.

“IRS” means the Internal Revenue Service.

“Knowledge of the Sellers” or any similar phrase means the actual knowledge of the Seller Representative, in each case without obligation of inquiry.

“Law” means any statute, law, ordinance, rule, regulation of any Governmental Entity.

“Liability” means all indebtedness, obligations and other liabilities and contingencies of a Person, whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, hypothecation or other encumbrance in respect of such property or asset.

“Material Adverse Effect” means any material adverse effect on the assets, properties, condition (financial or otherwise), operations of the Companies and any of its Subsidiaries, taken as a whole; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyer; (vi) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (vii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Company; or (viii) any natural or man-made disaster or acts of God (including, without limitation, pandemic).

“Minimum Cash Amount” means $25,000.

“Net Working Capital” means (i) Accounts Receivable; plus (ii) Inventory; plus (iii) prepaid expenses and other current assets, including, but not limited to, the Minimum Cash Amount; less (iv) current accounts payable, accrued Liabilities and outstanding checks and other current Liabilities. 

“Net Working Capital Target” is equal to $4,250,000.00.

“OCBOA” means Other Comprehensive Basis of Accounting. The Companies use tax-based accounting on an accrual basis.

“Order” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

“Permit” means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity of competent jurisdiction or pursuant to any Law.

“Permitted Liens” means (a) Liens for current real or personal property Taxes that are not yet due and payable or that may hereafter be paid without material penalty or that are being contested in good faith, (b) statutory Liens of landlords and workers’, carriers’ and mechanics’ or other like Liens incurred in the ordinary course of business or that are being contested in good faith, (c) Liens and encroachments which do not materially interfere with the present or proposed use of the properties or assets they affect, (d) Liens that will be released prior to or as of the Closing, (e) Liens arising under this Agreement, (f) Liens created by or through the Buyer, and (g) Liens set forth on Section 3.3(a) of the Disclosure Schedule.

“Person” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any agency, instrumentality or political subdivision of a Governmental Entity, or any other entity or body.

“PPP Loan” means that certain loan under the Paycheck Protection Program between JP Morgan Chase Bank and Wolo Manufacturing Corp., in the original principal amount of $172,350.

“Preliminary Working Capital” means the Net Working Capital as reflected on the Preliminary Balance Sheet, determined in accordance with OCBOA.

“Pro Rata Share” means with respect to Stanley Solow, 50% and with respect to Barbara Solow, 50%.

“Representatives” means, with respect to any Person, the respective directors, officers, employees, counsel, accountants and other representatives of such Person.

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity of which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of a non-corporate Person.

“Taxes” means all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, transfer, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy and other taxes, tariffs, duties or assessments of any nature whatsoever.

“Taxing Authority” means any Governmental Entity having or purporting to exercise jurisdiction with respect to any Tax.

“Tax Returns” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Transaction Proposal” means any unsolicited written bona fide proposal made by a third party relating to (i) any direct or indirect acquisition or purchase of all or substantially all assets of the Companies, (ii) any direct or indirect acquisition or purchase of a majority of the combined voting power of the Shares, (iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Companies in which the other party thereto or its stockholders will own 51% or more of the combined voting power of the parent entity resulting from any such transaction, or (iv) any other transaction that is inconsistent with the intent and purpose of this Agreement.

“Transfer Taxes” means sales, use, transfer, recording, documentary, stamp, registration and stock transfer Taxes and any similar Taxes.

“$” means United States dollars.

(b) For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (i) the meaning assigned to each term defined herein will be equally applicable to both the singular and the plural forms of such term and vice versa, and words denoting any gender will include all genders as the context requires; (ii) where a word or phrase is defined herein, each of its other grammatical forms will have a corresponding meaning; (iii) the terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; (iv) when a reference is made in this Agreement to an Article, Section, paragraph, Exhibit or Schedule without reference to a document, such reference is to an Article, Section, paragraph, Exhibit or Schedule to this Agreement; (v) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule will also apply to paragraphs and other subdivisions; (vi) the word “include”, “includes” or “including” when used in this Agreement will be deemed to include the words “without limitation”, unless otherwise specified; (vii) a reference to any Party to this Agreement or any other agreement or document will include such Party’s predecessors, successors and permitted assigns; (viii) a reference to any Law means such Law as amended, modified, codified, replaced or reenacted as of the date hereof, and all rules and regulations promulgated thereunder as of the date hereof; and (ix) all accounting terms used and not defined herein have the respective meanings given to them under OCBOA.

ARTICLE II
PURCHASE AND SALE OF THE SHARES

2.1 Purchase and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing the Sellers will sell, transfer and deliver, and the Buyer will purchase from the Sellers, all of the Shares, for an aggregate purchase price, subject to adjustment as described in Section 2.2, of Seven Million Three Hundred Thousand Dollars ($7,300,000) in cash (the “Purchase Price”).

(a) At the Closing, the Buyer will deliver to each of the Sellers, in immediately available funds to the account(s) designated by the Seller Representative prior to the Closing, an amount equal to their respective Pro Rata Share of (i) the Purchase Price, less (ii) the Escrow Amount (the “Closing Payment”).

(b) At the Closing, the Buyer will deliver an amount equal to the outstanding balance of the PPP Loan as of the Closing Date (the “Escrow Amount”), which will be delivered to JPMorgan Chase Bank, N.A. (the “Escrow Agent”) for deposit into an escrow account (the “Escrow Account”) to be established pursuant to the terms of the Escrow Agreement.

(c) At the Closing, the Seller Representative will deliver to the Buyer a certificate or certificates representing the Shares, if certificated, duly endorsed or accompanied by stock powers duly endorsed in blank.

2.2 Adjustments to Purchase Price.

(a) Working Capital Adjustment.

(i) At the Closing, the Sellers shall deliver to the Buyer an unaudited balance sheet of the Companies (the “Preliminary Balance Sheet”) as at the Closing together with a certificate of the Seller stating that the Preliminary Balance Sheet was prepared in accordance with OCBOA so as to present fairly in all material respects the financial condition of the Companies as of such date.

(ii) If the Net Working Capital Target exceeds the Net Working Capital as set forth on the Preliminary Balance Sheet, then the Closing Payment shall be reduced at the Closing by an amount equal to such difference. If the Net Working Capital as set forth on the Preliminary Balance Sheet exceeds the Net Working Capital Target at Closing, the Closing Payment shall be increased at the Closing by an amount equal to such difference.

(iii)   As soon as practicable following the Closing Date (but not later than seventy-five (75) days after the Closing Date), the Buyer shall cause its auditor to prepare and deliver to the Seller Representative an audited balance sheet of the Companies (the “Closing Date Balance Sheet”) as of the Closing Date. The Closing Date Balance Sheet shall be prepared in accordance with OCBOA in a manner consistent with the Preliminary Balance Sheet so as to present fairly in all material respects the financial condition of the Companies, it being understood that, in all circumstances, the same methodology, calculation and principles must be used to calculate each of the Net Working Capital Target, the Preliminary Working Capital and the Closing Working Capital; provided, however, that the Parties hereby acknowledge that the Inventory Value (adjusted for inventory sold and inventory received through the closing date and priced at the price paid by the Company using the Company’s historical inventory pricing methodology) shall be the value attributed to Inventory for all purposes, including without limitation, the Closing Date Balance Sheet and Closing Working Capital and that under no circumstances shall there be any reduction to the Inventory Value, the Preliminary Working Capital or the Closing Working Capital on account of any slow moving, obsolete or other inventory matters unless there is a corresponding dollar for dollar reduction to the Net Working Capital Target. Unless otherwise consented to by the Sellers, which consent shall not be unreasonably withheld, in the event that the Buyer fails to deliver to the Closing Date Balance Sheet to the Seller Representative prior to the end of such seventy-five (75) day period, the Net Working Capital as set forth on the Preliminary Balance Sheet shall be deemed final and conclusive and binding upon the Sellers and the Buyer as the Closing Working Capital.

(iv) If the Closing Working Capital exceeds the Preliminary Working Capital, then the Buyer (or, at the Buyer’s direction, the Companies) shall pay promptly (and, in any event, within seven (7) days) to the Sellers an amount in cash that is equal to their respective Pro Rata Share of such excess. If the Preliminary Working Capital exceeds the Closing Working Capital, then the Sellers shall pay promptly (and, in any event, within seven (7) days) to the Buyer an amount in cash that is equal to their respective Pro Rata Share of such excess. Any such adjustment shall be treated as an adjustment to the Purchase Price.

(v) In the event the Seller Representative does not agree with the calculation of Closing Working Capital as reflected on the Closing Date Balance Sheet, the Seller Representative shall so inform the Buyer in writing within thirty (30) days of the Seller Representative’s receipt thereof, such writing to set forth the objections of the Seller Representative in reasonable detail. If the Seller Representative and the Buyer cannot reach agreement as to any disputed matter relating to the Closing Working Capital within thirty (30) days after notification by the Seller Representative to the Buyer of a dispute, they shall forthwith refer the dispute to an Independent Accounting Firm mutually agreeable to the Seller Representative and the Buyer for resolution, with the understanding that such firm shall resolve all disputed items within thirty (30) days after such disputed items are referred to the Independent Accounting Firm. If the Buyer and the Seller Representative are unable to agree on the choice of an Independent Accounting Firm, they shall select an Independent Accounting Firm by lot (after excluding their respective regular outside accounting firms). The Sellers, on the one hand, and the Buyer, on the other hand, shall bear one-half of the costs of such accounting firm. The decision of the accounting firm with respect to all disputed matters relating to the Closing Working Capital shall be deemed final and conclusive and shall be binding upon the Sellers and the Buyer. In addition, if the Seller Representative does not object to the Closing Working Capital within the thirty (30) day period referred to above, the Closing Working Capital, as reflected on the Closing Date Balance Sheet as so prepared, shall be deemed final and conclusive and binding upon the Sellers and the Buyer.

(vi) The Seller Representative shall be entitled to have access to the books and records of the Companies and the Buyer’s work papers prepared in connection with the Closing Date Balance Sheet and shall be entitled to discuss such books and records and work papers with the Buyer and those persons responsible for the preparation thereof.

(b) Adjustment for Outstanding Indebtedness. The Closing Payment shall be decreased by the amount of any outstanding Indebtedness of the Companies existing as of the Closing Date and the deducted amount shall be utilized to pay off such outstanding Indebtedness; provided, however, that any amounts outstanding as of the Closing Date in respect of the PPP Loan shall remain outstanding and no adjustment to the Closing Payment shall be made in connection therewith.

(c) Adjustment for Outstanding Cash. The Closing Payment shall be increased by an amount equal to (i) the aggregate amount of outstanding cash and cash equivalents of the Companies existing as of the Closing Date, less (ii) the Minimum Cash Amount.

2.3 Closing. The consummation of the Acquisition (the “Closing”) will take place by the reciprocal delivery of closing documents by electronic mail, regular mail, fax or any other means mutually agreed upon by the Parties hereto on a date that is no later than two (2) Business Days immediately following the day on which the last of the conditions to closing contained in Article VII (other than any conditions that by their nature are to be satisfied at the Closing) is satisfied or waived in accordance with this Agreement or at such other location or on such other date as the Buyer and the Seller Representative may mutually determine (the date on which the Closing actually occurs is referred to as the “Closing Date”). Notwithstanding the foregoing, it is the intent of the Parties that the Closing shall occur on or prior to December 31, 2020. In the event that the Closing occurs following December 31, 2020, Buyer shall indemnify and hold harmless Sellers for any amounts in respect of Taxes payable by Sellers in connection with the transactions contemplated by this Agreement that are in excess of the amounts in respect of Taxes that would have been payable by Sellers in connection with the transactions contemplated by this Agreement if the Closing had occurred on or prior to December 31, 2020.

2.4 Transactions to be Effected at the Closing.

(a) At the Closing, the Buyer will (i) pay to each Seller, their respective Closing Payment, adjusted in accordance with subsection 2.2(a)(ii), subsection 2.2(b) and subsection 2.2(c) above, by paying such sum to the Sellers by transfer of immediately available funds in accordance with instructions provided by the Seller Representative and (ii) deliver to the Sellers all other documents, instruments or certificates required to be delivered by the Buyer at or prior to the Closing pursuant to Section 7.2 of this Agreement.

(b) At the Closing, the Buyer will deliver the Escrow Amount to the Escrow Agent for deposit into the Escrow Account.

(c) At the Closing, each Seller will deliver to the Buyer (i) a certificate or certificates representing his or her Shares duly endorsed or accompanied by stock powers duly endorsed in blank and (ii) all other documents, instruments or certificates required to be delivered by the Sellers at or prior to the Closing pursuant to Section 7.1 of this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER

Each of the Sellers represents and warrants to the Buyer that each statement contained in this Article III is true and correct as of the date hereof, except as set forth in the disclosure schedule to be delivered to the Buyer in accordance with Section 6.11 hereof (the “Disclosure Schedule”). The Disclosure Schedule has been arranged for purposes of convenience only, in sections corresponding to the Sections of this Article III and Article IV. Each section of the Disclosure Schedule will be deemed to incorporate by reference all information disclosed in any other section of the Disclosure Schedule.

3.1 Authority and Enforceability. Each Seller has the requisite legal capacity to execute and deliver this Agreement, to perform such Seller’s obligations hereunder and to consummate the Acquisition and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by such Seller and, assuming the due authorization, execution and delivery by each other Party hereto, constitutes a legal, valid and binding obligation of such Seller, enforceable against each Seller in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

3.2 Noncontravention.

(a) Neither the execution and the delivery of this Agreement nor the consummation of the Acquisition or the other transactions contemplated by this Agreement will, with or without the giving of notice or the lapse of time or both, (i) to the Knowledge of the Sellers and assuming compliance with the filing and notice requirements set forth in Section 3.2(b)(i), violate any Law applicable to such Seller or (ii) violate any Contract to which such Seller is a party, except to the extent that any such violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) The execution and delivery of this Agreement by each Seller does not, and the performance of this Agreement by such Seller will not, require any consent, approval, authorization or Permit of, or filing with or notification to, any Governmental Entity, except for (i) the filings set forth in Section 3.2(b) of the Disclosure Schedule or (ii) where the failure to take such action would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.3 The Shares.

(a) The Sellers holds of record and owns beneficially all of the Shares constituting all of the issued and outstanding shares of capital stock of the Companies, free and clear of all Liens, other than Permitted Liens.

(b) Except as set forth in this Agreement, no Seller is a party to any Contract obligating a Seller to vote or dispose of any shares of the capital stock of, or other equity or voting interests in, the Companies.

3.4 Brokers’ Fees. Except as set forth in Section 3.4 of the Disclosure Schedule, the Sellers do not have any Liability to pay any fees or commissions to any broker, finder or agent with respect to this Agreement, the Acquisition or the transactions contemplated by this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES

The Seller Representative represents and warrants to the Buyer that each statement contained in this Article IV is true and correct as of the date hereof, except as set forth in the Disclosure Schedule.

4.1 Organization, Qualification and Corporate Power; Authority and Enforceability.

(a) Each Company is a corporation duly organized, validly existing and in good standing under the Laws of New York, and has all requisite corporate power and authority, directly or indirectly, to own, lease and operate its properties and assets and to carry on its business as it is now being conducted. Each Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties or assets owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) Each Company has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Companies of this Agreement and the consummation by the Companies of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Companies, and no other action is necessary on the part of the Companies to authorize this Agreement or to consummate the Acquisition or the other transactions contemplated hereby. This Agreement has been duly executed and delivered by each of the Companies and, assuming the due authorization, execution and delivery by each other Party hereto, constitutes a legal, valid and binding obligation of the Companies, enforceable against each of the Companies in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

4.2 Subsidiaries. The Companies do not have any Subsidiaries.

4.3 Capitalization.

(a) The authorized and outstanding capital stock of the Companies is as set forth in Section 4.3(a) of the Disclosure Schedule. No other capital stock of the Companies are authorized, issued or outstanding.

(b) There are no outstanding options, warrants or other securities or subscription, preemptive or other rights convertible into or exchangeable or exercisable for any shares of capital stock or other equity or voting interests of the Companies and there are no “phantom stock” rights, stock appreciation rights or other similar rights with respect to the Companies. There are no Contracts of any kind to which the Companies are a party or by which the Companies are bound, obligating the Companies to issue, deliver, grant or sell, or cause to be issued, delivered, granted or sold, additional shares of capital stock of, or other equity or voting interests in, or options, warrants or other securities or subscription, preemptive or other rights convertible into, or exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Companies, or any “phantom stock” right, stock appreciation right or other similar right with respect to the Companies, or obligating the Companies to enter into any such Contract.

(c) There are no securities or other instruments or obligations of the Companies, the value of which is in any way based upon or derived from any capital or voting stock of the Companies or having the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right to vote) on any matters on which the Companies’ stockholders may vote.

(d) There are no Contracts, contingent or otherwise, obligating the Companies to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Companies. There are no voting trusts, registration rights agreements or stockholder agreements to which either of the Companies is a party with respect to the voting of the capital stock of the Companies or with respect to the granting of registration rights for any of the capital stock of the Companies. There are no rights plans affecting the Companies.

(e) Except as set forth in Section 4.3(e) of the Disclosure Schedule, there is no Indebtedness of the Companies.

4.4 Noncontravention.

(a) Neither the execution and delivery of this Agreement nor the consummation of the Acquisition and the other transactions contemplated by this Agreement will, with or without the giving of notice or the lapse of time or both, (i) violate any provision of the articles of incorporation or bylaws (or comparable organization documents, as applicable) of the Companies, (ii) to the Knowledge of the Sellers and assuming compliance with the filing and notice requirements set forth in Section 4.4(b)(i), violate any Law applicable to the Companies on the date hereof or (iii) except as set forth in Section 4.4(a) of the Disclosure Schedule, violate any Contract to which the Companies are a party, except in the case of clauses (ii) and (iii) to the extent that any such violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) The execution and delivery of this Agreement by the Companies does not, and the performance of this Agreement by the Companies will not, require any consent, approval, authorization or Permit of, or filing with or notification to, any Governmental Entity, except for (i) the filings set forth in Section 4.4(b) of the Disclosure Schedule or (ii) where the failure to take such action would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.5 Financial Statements.

(a) Section 4.5(a) of the Disclosure Schedule contains true and complete copies of (i) the unaudited balance sheet of the Companies as of December 31, 2019 and December 31, 2018 and the related unaudited statements of income and cash flows for the two years ended December 31, 2019 and December 31, 2018 (the “Annual Financial Statements”) and (ii) the unaudited balance sheet of the Companies as of September 30, 2020 and the related statements of income and cash flows for the nine-month period ended September 30, 2020 (the “Interim Financial Statements” and, together with the Annual Financial Statements, the “Financial Statements”).

(b) Except for the accruals that are referred to in Section 4.5(b) of the Disclosure Schedule, the Financial Statements: (a) are prepared from and consistent with such financial statements as have been prepared and used by the Companies in the ordinary course of managing the Business and measuring and reporting their operating results; (b) are prepared in accordance with OCBOA (except that (i) purchases and inventories are stated at weighted average cost and (ii) neither Company has made any adjustments pursuant to Section 263A of the Code) applied on a consistent basis; and (c) fairly present the assets, liabilities, financial position, results of operations, and cash flows of the Companies as of the dates and for the periods indicated, provided that the Interim Financial Statements do not have statements of cash flow or footnote disclosures.

4.6 Taxes.

(a) All material Tax Returns required to have been filed by the Companies have been filed, and each such Tax Return reflects the liability for Taxes in all material respects. All Taxes shown on such Tax Returns as due have been paid or accrued.

(b) To the Knowledge of the Sellers, there is no audit pending against the Companies in respect of any Taxes. There are no Liens on any of the assets of the Companies that arose in connection with any failure (or alleged failure) to pay any Tax, other than Liens for Taxes not yet due and payable.

(c) The Companies have withheld and paid or accrued for all material Taxes required to have been withheld and paid or accrued for in connection with amounts paid or owing to any third party.

(d) The Companies have not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(e) The Companies are not a party to any Tax allocation or sharing agreement.

4.7 Compliance with Laws and Orders; Permits.

(a) The Companies are in compliance with all Laws and Orders to which the business of the Companies are subject, except where such failure to comply would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) The Companies owns, holds, possesses or lawfully uses in the operation of its business all Permits that are necessary for it to conduct its business as now conducted, except where such failure to own, hold, possess or lawfully use such Permit would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.8 No Undisclosed Liabilities. The Companies do not have any Liability, except for (i) Liabilities set forth on the Interim Financial Statements and (ii) Liabilities which have arisen since the date of the Interim Financial Statements in the ordinary course of business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law).

4.9 Tangible Personal Assets.

(a) The Companies have good title to, or a valid interest in, all of its tangible personal assets, free and clear of all Liens, other than (i) Permitted Liens or (ii) Liens that, individually or in the aggregate, do not materially interfere with the ability of the Companies thereof to conduct its business as currently conducted and do not adversely affect the value of, or the ability to sell, such personal properties and assets.

(b) The Companies’ tangible personal assets are in good operating condition, working order and repair, subject to ordinary wear and tear, free from defects (other than defects that do not interfere with the continued use thereof in the conduct of normal operations) and are suitable for the purposes for which they are currently being used.

4.10 Real Property. No Company owns any real property. Section 4.10 of the Disclosure Schedule contains a list of all leases and subleases (collectively, the “Real Property Leases”) under which the Companies are either lessor or lessee (the “Real Property”). The Sellers have heretofore made available to the Buyer true and complete copies of each Real Property Lease. To the Knowledge of the Sellers, (i) all Real Property Leases are valid and binding Contracts of the Companies and are in full force and effect (except for those that have terminated or will terminate by their own terms), and (ii) neither the Companies or any other party thereto, is in violation or breach of or default (or with notice or lapse of time, or both, would be in violation or breach of or default) under the terms of any such Contract, in each case, except where such default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.11 Intellectual Property.

(a) “Intellectual Property” means (i) trade secrets, inventions, confidential and proprietary information, know-how, formulae and processes, (ii) patents (including all provisionals, reissues, divisions, continuations and extensions thereof) and patent applications, (iii) trademarks, trade names, trade dress, brand names, domain names, trademark registrations, trademark applications, service marks, service mark registrations and service mark applications (whether registered, unregistered or existing at common law, including all goodwill attaching thereto), (iv) copyrights, including copyright registrations, copyright applications and unregistered common law copyrights; (v) and all licenses for the Intellectual Property listed in items (i) – (iv) above.

(b) Section 4.11(b) of the Disclosure Schedule sets forth a list that includes all material Intellectual Property owned by the Companies (the “Companies-Owned Intellectual Property”) that is registered or subject to an application for registration (including the jurisdictions where such Companies-Owned Intellectual Property is registered or where applications have been filed, and all registration or application numbers, as appropriate).

(c) All necessary registration, maintenance and renewal fees have been paid and all necessary documents have been filed with the United States Patent and Trademark Office or foreign patent and trademark office in the relevant foreign jurisdiction for the purposes of maintaining the registered Companies-Owned Intellectual Property.

(d) Except as set forth on Section 4.11(d) of the Disclosure Schedule, (i) the Companies are the exclusive owner of the Companies-Owned Intellectual Property free and clear of all Liens (other than Permitted Liens); (ii) to the Knowledge of the Sellers no proceedings have been instituted, are pending or are threatened that challenge the rights of the Companies in or the validity or enforceability of the Companies-Owned Intellectual Property; (iii) to the Knowledge of the Sellers, neither the use of the Companies-Owned Intellectual Property as currently used by the Companies in the conduct of the Companies’ business, nor the conduct of the business as presently conducted by the Companies infringes, dilutes, misappropriates or otherwise violates in any material respect the Intellectual Property rights of any Person; and (iv) as of the date of this Agreement, the Companies have made no claim of a violation, infringement, misuse or misappropriation by any Person, of their rights to, or in connection with, the Companies-Owned Intellectual Property.

(e) Except as set forth in Section 4.11(e) of the Disclosure Schedule, the Companies have not permitted or licensed any Person to use any Companies-Owned Intellectual Property.

(f) Section 4.11(f) of the Disclosure Schedule sets forth a complete and accurate list of all licenses, other than “off the shelf” commercially available software programs, pursuant to which the Companies licenses from any Person Intellectual Property that is material to and used in the conduct of the business by the Companies.

(g) To the Knowledge of the Sellers, the Companies are not in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in any Contract pursuant to which any third party is authorized to use any Companies-Owned Intellectual Property or pursuant to which the Companies are licensed to use Intellectual Property owned by a third party, except where such default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.12 Absence of Certain Changes or Events. Since the date of the Interim Financial Statements, no event has occurred that has had, individually or in the aggregate, a Material Adverse Effect. Without limiting the generality of the foregoing, except as set forth on Section 4.12 of the Disclosure Schedule, since the date of the Interim Financial Statements:

(a) the Companies have not sold, leased, transferred, or assigned any of its material assets, tangible or intangible, other than for a fair consideration in the ordinary course of business;

(b) the Companies have not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either involving more than $50,000 or outside the ordinary course of business;

(c) no party (including the Companies) has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $50,000 to which the Companies are a party or by which any of them is bound;

(d) the Companies have not imposed any Liens upon any of its assets, tangible or intangible;

(e) the Companies have not made any capital expenditure (or series of related capital expenditures) either involving more than $50,000 or outside the ordinary course of business;

(f) the Companies have not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either involving more than $50,000 or outside the ordinary course of business;

(g) the Companies have not transferred, assigned, or granted any license or sublicense of any rights under or with respect to any material Intellectual Property;

(h) there has been no change made or authorized in the certificate of incorporation or bylaws of the Companies;

(i) the Companies have not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;

(j) the Companies have not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the ordinary course of business;

(k) the Companies have not entered into any employment contract or modified the terms of any existing such contract or agreement;

(l) the Companies have not granted any increase in the base compensation of any of its directors, officers, and employees outside the ordinary course of business;

(m) the Companies have not committed to any of the foregoing.

4.13 Contracts.

(a) Except as set forth in Section 4.13(a) of the Disclosure Schedule, as of the date hereof, the Companies are not a party to or bound by any: (i) Contract not contemplated by this Agreement that materially limits the ability of the Companies to engage or compete in any manner of the business presently conducted by the Companies; (ii) Contract that creates a partnership or joint venture or similar arrangement with respect to any material business of the Companies; (iii) indenture, credit agreement, loan agreement, security agreement, guarantee, note, mortgage or other evidence of indebtedness or agreement providing for indebtedness in excess of $50,000; (iv) Contract that relates to the acquisition or disposition of any material business (whether by merger, sale of stock, sale of assets or otherwise) other than this Agreement; and (v) Contract that involves performance of services or delivery of goods or materials by or to the Companies in an amount or with a value in excess of $50,000 in any 12-month period (which period may extend past the Closing).

(b) The Sellers have heretofore made available to the Buyer true and complete copies of each of the Contracts set forth in Section 4.13(a) of the Disclosure Schedule. To the Knowledge of the Sellers, (i) all such Contracts are valid and binding, (ii) all such Contracts are in full force and effect (except for those that have terminated or will terminate by their own terms), and (iii) neither any Company nor any other party thereto, is in violation or breach of or default under (or with notice or lapse of time, or both, would be in violation or breach of or default under) the terms of any such Contract, in each case, except where such default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.14 Litigation. Except as set forth in Section 4.14 of the Disclosure Schedule, there is no Action pending or, to the Knowledge of the Sellers, threatened against the Companies that (a) challenges or seeks to enjoin, alter or materially delay the Acquisition or (b) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.15 Employee Benefits.

(a) Section 4.15(a) of the Disclosure Schedule includes a list of all Benefit Plans maintained or contributed to by the Companies (the “Companies Benefit Plans”). The Sellers have delivered or made available to the Buyer copies of (i) each Companies Benefit Plan, (ii) the most recent summary plan description for each Companies Benefit Plan for which such a summary plan description is required and (iii) the most recent favorable determination letters from the IRS with respect to each Companies Benefit Plan intended to qualify under Section 401(a) of the Code.

(b) Except as set forth in Section 4.15(b) of the Disclosure Schedule, (i) none of the Companies Benefit Plans is subject to Title IV of ERISA; (ii) each Companies Benefit Plan that is intended to be qualified under Section 401(a) of the Code is subject to a favorable determination letter from the IRS and, to the Knowledge of the Sellers, no event has occurred and no condition exists that is reasonably likely to result in the revocation of any such determination; and (iii) each Companies Benefit Plan is in compliance with all applicable provisions of ERISA and the Code, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.16 Labor and Employment Matters. Section 4.16 of the Disclosure Schedule sets forth a list of all written employment agreements that obligate the Companies to pay an annual salary of $50,000 or more and to which the Companies are a party. To the Knowledge of the Sellers, there are no pending labor disputes, work stoppages, requests for representation, pickets, work slow-downs due to labor disagreements or any actions or arbitrations that involve the labor or employment relations of the Companies. The Companies are not party to any collective bargaining agreement.

4.17 Environmental. Except (i) as set forth in Section 4.17 of the Disclosure Schedule or (ii) for any matter that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) the Companies are in compliance with all applicable Laws relating to protection of the environment (“Environmental Laws”), (b) the Companies possesses and is in compliance with all Permits required under any Environmental Law for the conduct of its operations and (c) there are no Actions pending against the Companies alleging a violation of any Environmental Law. No property currently or formerly owned or operated by the Companies or has been contaminated with any Hazardous Substance in a manner that could reasonably be expected to require remediation or other action pursuant to any Environmental Law. Neither the Sellers, nor the Companies have received any written notice, demand, letter, claim or request for information alleging that the Companies or the Sellers are in violation of or liable under any Environmental Law. For purposes of this Agreement, “Hazardous Substance” means any substance that is: (i) listed, classified, regulated or defined pursuant to any Environmental Law or (ii) any petroleum product or by-product, asbestos-containing material, polychlorinated biphenyls or radioactive material.

4.18 Insurance. Section 4.18 of the Disclosure Schedule sets forth a list of each insurance policy that covers the Companies or its businesses, properties, assets, directors, officers or employees (the “Policies”). Such Policies are in full force and effect in all material respects and the Companies are not in violation or breach of or default under any of its obligations under any such Policy, except where such default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.19 Inventory. The inventory of the Companies consists of raw materials and supplies, manufactured and purchased parts, goods in process, and finished goods (collectively, “Inventory”). Section 4.19 of the Disclosure Schedule sets forth each item and amount of Inventory owned by the Companies as of the Closing Date. For the avoidance of doubt, neither Sellers nor the Companies makes any representation or warranty (a) with respect to the price or obsolescence of any of the Inventory owned by the Companies as of the Closing Date or (b) with respect to whether any amount of Inventory item owned by the Companies as of the Closing Date is excessive. The Parties agree that the aggregate value of the Inventory shall be equal to the Inventory Value.

4.20 Notes and Accounts Receivable. All notes and accounts receivable of the Company are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with past practice, subject only to the reserve for bad debts set forth on the face of the balance sheet included in the Interim Financial Statements (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company.

4.21 Powers of Attorney. There are no outstanding powers of attorney executed on behalf of any of the Companies.

4.22 Product Warranty. Section 4.22 of the Disclosure Schedule contains a true, correct, and complete copy of each Company’s standard written warranty or warranties for sales of its products, and except as expressly set forth therein, there are no warranties, deviations from standard warranties, or commitments or material obligations with respect to the return, repair, replacement, or re-performance of products under which any Company has any liability. Section 4.22 of the Disclosure Schedule also contains a description of all pending warranty claims involving any Company or the Business as of the Closing Date. Other than in the ordinary course of business, none of the Companies’ products has been the subject of any replacement, field fix, retrofit, modification, or recall campaign. All of the Companies’ products have been designed, manufactured, labeled, and performed so as to meet and comply with all industry standards and specifications and all applicable Laws and Orders currently in effect, and have received all governmental approvals necessary to allow their sale and use.

4.23 Brokers’ Fees. Except as set forth in Section 4.23 of the Disclosure Schedule, which such fees shall be paid prior to or at Closing with the Companies’ cash, the Companies have no Liability to pay any fees or commissions to any broker, finder or agent with respect to this Agreement, the Acquisition or the transactions contemplated by this Agreement.

4.24 Certain Business Relationships with the Companies. Except as set forth in Section 4.24 of the Disclosure Schedule, no Seller, nor any Affiliate of a Seller, has been involved in any business arrangement or relationship with the Companies within the past 12 months, and neither the Sellers, nor any Affiliate of the Sellers, owns any asset, tangible or intangible, which is used in the Business.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Sellers that each statement contained in this Article V is true and correct as of the date hereof.

5.1 Organization. The Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the state of Delaware.

5.2 Authorization. The Buyer has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Buyer of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary action, and no other action on the part of the Buyer is necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than compliance with the filing and notice requirements set forth in Section 5.3(b)(i)). This Agreement has been duly executed and delivered by the Buyer and, assuming the due authorization, execution and delivery by each of the other Parties hereto, constitutes a legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

5.3 Noncontravention.

(a) Neither the execution and the delivery of this Agreement, nor the consummation of the Acquisition and the other transactions contemplated by this Agreement, will, with or without the giving of notice or the lapse of time or both, (i) violate any provision of the certificate of incorporation or bylaws (or comparable organization documents, as applicable) of the Buyer, (ii) violate any Law applicable to the Buyer on the date hereof or (iii) violate any Contract to which the Buyer is a party, except in the case of clauses (ii) and (iii) to the extent that any such violation would not reasonably be expected to prevent or materially delay the consummation of the Acquisition and the other transactions contemplated by this Agreement.

(b) The execution and delivery of this Agreement by the Buyer does not, and the performance of this Agreement by the Buyer will not, require any consent, approval, authorization or Permit of, or filing with or notification to, any Governmental Entity, except for (i) the filings set forth in Section 5.3(b)(i) or (ii) where the failure to take such action would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Brokers’ Fees. The Buyer has no Liability to pay any fees or commissions to any broker, finder or agent with respect to this Agreement, the Acquisition or the transactions contemplated by this Agreement that could result in any Liability being imposed on the Sellers or the Companies.

ARTICLE VI
COVENANTS

6.1 Consents. The Companies will use its commercially reasonable efforts to obtain any required third-party consents to the Acquisition and the other transactions contemplated by this Agreement in writing from each Person.

6.2 Operation of the Companies’ Business. During the period commencing on the date hereof and ending at the earlier of the Closing and the termination of this Agreement in accordance with Article VIII, each Company, except (i) as otherwise contemplated by this Agreement, (ii) as required by applicable Law or (iii) with the prior written consent of the Buyer (which consent will not be unreasonably withheld or delayed), will use commercially reasonable efforts to carry on its business in a manner consistent with past practice and not take any action or enter into any transaction that would result in the following:

(a) any change in the articles of incorporation, as amended or bylaws, as amended, of the Companies or any amendment of any material term of any outstanding security of the Companies;

(b) any issuance or sale of any additional shares of, or rights of any kind to acquire any shares of, any capital stock of any class of the Companies (whether through the issuance or granting of options or otherwise);

(c) any incurrence, guarantee or assumption by the Companies of any indebtedness for borrowed money other than in the ordinary course of business in amounts and on terms consistent with past practice;

(d) any change in any method of accounting, accounting principle or accounting practice by the Companies which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(e) except in the ordinary course of business (i) any adoption or material amendment of any Companies Benefit Plan, (ii) any entry into any collective bargaining agreement with any labor organization or union, (iii) any entry into an employment agreement or (iv) any increase in the rate of compensation to any employee in an amount that exceeds 10% of such employee’s current compensation; provided, that the Companies may (A) take any such action for employees in the ordinary course of business or pursuant to any existing Contracts or Companies Benefit Plans and (B) adopt or amend any Companies Benefit Plan if the cost to such Person of providing benefits thereunder is not materially increased;

(f) except in the ordinary course of business, any cancellation, modification, termination or grant of waiver of any material Permits or Contracts to which the Companies are a party, which cancellation, modification, termination or grant of waiver would, individually or in the aggregate, have a Material Adverse Effect;

(g) any change in the Tax elections made by the Companies or in any accounting method used by the Companies for Tax purposes, where such Tax election or change in accounting method may have a material effect upon the Tax Liability of the Companies for any period or set of periods, or the settlement or compromise of any material income Tax Liability of the Companies;

(h) except in the ordinary course of business, any acquisition or disposition of any business or any material property or asset of any Person (whether by merger, consolidation or otherwise) by a Company;

(i) any grant of a Lien on any properties and assets of a Company that would have, individually or in the aggregate, a Material Adverse Effect;

(j) any entry into any agreement or commitment to do any of the foregoing.

6.3 Access. The Companies will permit the Buyer and its Representatives to have reasonable access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Companies, to the premises, properties, books, records (including Tax records), Contracts and documents of or pertaining to the Companies.

6.4 Transfer of Cash and Cash Equivalents. On or prior to the Closing, the Companies and Sellers may transfer, or cause to be distributed all cash and cash equivalents of the Companies to, among other things, pay any fees owed by Companies to brokers or advisors (including termination fees under any advisory agreement) and any indebtedness for borrowed money; provided, however, that the Companies shall have an amount in cash in its corporate bank account and on hand at its store locations at the Closing that is equal to the Minimum Cash Amount.

6.5 Notice of Developments. The Sellers and the Companies will give prompt written notice to the Buyer of any event that would reasonably be expected to give rise to, individually or in the aggregate, a Material Adverse Effect or would reasonably be expected to cause a material breach of any of its respective representations, warranties, covenants or other agreements contained herein. The Buyer will give prompt written notice to the Sellers and the Companies of any event that could reasonably be expected to cause a material breach of any of its representations, warranties, covenants or other agreements contained herein or could reasonably be expected to, individually or in the aggregate, prevent or materially delay the consummation of the Acquisition and the other transactions contemplated by this Agreement. The delivery of any notice pursuant to this Section 6.5 will not limit, expand or otherwise affect the remedies available hereunder (if any) to the party receiving such notice.

6.6 No Solicitation.

(a) Each of the Sellers and the Companies will, and will cause each of their Representatives to, cease immediately any existing discussions regarding a Transaction Proposal.

(b) From and after the date of this Agreement, without the prior consent of the Buyer, none of the Sellers nor the Companies will, nor will they authorize or permit any of their respective Representatives to, directly or indirectly through another Person to, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action designed to facilitate any inquiries, proposals or offers from any Person that constitute, or would reasonably be expected to constitute, a Transaction Proposal, (ii) participate in any discussions or negotiations (including by way of furnishing information) regarding any Transaction Proposal or (iii) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek any of the foregoing.

(c) In addition, the Sellers shall immediately communicate to the Buyer the terms of any Transaction Proposal received by any of the Sellers or the Companies, or any of their Representatives.

6.7 Taking of Necessary Action; Further Action; Taxes. Subject to the terms and conditions of this Agreement, each of the Sellers, the Companies and the Buyer will take all such reasonable and lawful action as may be necessary or appropriate in order to effectuate the Acquisition in accordance with this Agreement as promptly as practicable. Without limiting the generality of the foregoing, in the event that any Tax refunds are issued to the Companies that relate to the period prior to the Closing, including without limitation in connection with the drawbacks described on Section 6.7 of the Disclosure Schedules, the Buyer shall cause the Companies to pay over such Tax refunds to the Sellers within five (5) days following the receipt by the Companies of the applicable funds.

6.8 Covenant not to Compete. For a period of three years from and after the Closing (the “Noncompetition Period”), each Seller , jointly and severally, shall not engage directly or indirectly in any business that is competitive with the Business within an area of one hundred miles of any geographic area in which the Business is conducted or which the Buyer plans to conduct the Business as of the Closing Date; provided, however, that no owner of less than 5% of the outstanding stock of any publicly-traded corporation shall be deemed to engage solely by reason thereof in any of its businesses. During the Noncompetition Period, the Sellers shall not induce or attempt to induce any customer, or supplier of the Business to terminate its relationship with the Buyer or any Affiliate of the Buyer or to enter into any business relationship to provide or purchase the same or substantially the same services as are provided to or purchased from the Business which might harm the Buyer or any Affiliate of the Buyer. During the Noncompetition Period, the Sellers shall not, on behalf of any entity other than the Buyer or an Affiliate of the Buyer, hire or retain, or attempt to hire or retain, in any capacity any Person who is, or was at any time during the preceding twelve (12) months, an employee or officer of the Business. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 6.8 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

6.9 Financial Information. The Sellers shall use reasonable efforts to cooperate with the Buyer and the Buyer’s independent certified public accounting firm in order to enable the Buyer to create audited financial statements for the two full fiscal years preceding the Closing Date, by making available the Sellers’ records as they are maintained in the ordinary course of business and answering reasonable questions.

6.10 Post-Closing Access to Books and Records. After the Closing, each Party will afford any other Party, its respective counsel, accountants and other representatives, during normal business hours, reasonable access to the books, records and other data in such Party’s possession relating directly or indirectly to the Business with respect to periods prior to the Closing, and the right to make copies and extracts therefrom at its expense, to the extent such access is reasonably required by the requesting Party for any proper business purpose, including without limitation, the creation of audited financial statements, the preparation of Tax Returns and litigations. Without limitation, after the Closing, each Party will make available to any other Party, as reasonably requested, and to any Taxing authority that is legally permitted to receive the following pursuant to its subpoena power or its equivalent, all books, records and other data relating to Taxes relating to the Business for all periods prior to or including the Closing and will preserve all such books, records and other data until the expiration of any applicable statute of limitations for assessment or refund of Taxes or extensions thereof.

6.11 Disclosure Schedule. The Sellers have prepared the schedules attached to this Agreement (individually, a “Schedule” and collectively, the “Disclosure Schedule”) and delivered them to Buyer on the date hereof. Disclosure of any matter, fact or circumstance in a Schedule to this Agreement shall be deemed to be disclosure thereof for purposes of (a) such Schedule, and (b) any other Schedule hereto solely to the extent it is reasonably apparent on the face of such disclosure (notwithstanding the absence of a specific cross reference) that such disclosure is applicable to such other Schedule. and warranties, such language will be disregarded and be of no force or effect.

6.12 Accounts Receivable. The Buyers agree to use commercially reasonable efforts in the ordinary course of business to cause the Companies to collect all accounts receivable outstanding as of the Closing Date during the period following the Closing Date in accordance with past practice. In the event that any such accounts receivable are not collected by the conclusion of such period (the “Uncollected Accounts”), (a) subject to the indemnification provisions of Article IX hereof, the Sellers shall make payment to the Companies in the amount of such Uncollected Accounts and (b) the Buyers shall cause the Companies to assign such Uncollected Accounts for the benefits of the Sellers and the Sellers shall have the right to collect such Uncollected Accounts in their sole discretion and for their sole benefit; provided, that in the event Buyer receives payment in respect of any Uncollected Accounts for which the Sellers have made payment pursuant to clause (a) above, the Buyer shall within five (5) days of receipt of such monies, pay over such amounts to the Sellers.

6.13 Inventory. Prior to the Closing, the Parties shall cooperate to conduct a physical count and valuation of the Inventory (the “Inventory Count”). In order to facilitate the Inventory Count, the Parties shall engage such professionals and advisors as they mutually agree and all costs associated with the engagement of such professionals and advisors shall be borne by the Party incurring such costs. Upon the conclusion of the Inventory Count, the Parties shall agree on the Inventory Value as determined by the Inventory Count by the mutual execution of Section 6.13 of the Disclosure Schedules.

6.14 PPP Loan. Prior to the Closing, the Parties shall cooperate to cause the Companies to apply for forgiveness of the PPP Loan in accordance with U.S. Small Business Administration Procedural Notice # 5000-20057. At the Closing, the Parties are delivering the Escrow Amount to Escrow Agent to be held by Escrow Agent in accordance with the terms of this Section 6.14 and the Escrow Agreement. Within five (5) days following the Closing Date, the Parties shall cooperate to cause the Companies to furnish the following information to Escrow Agent and the U.S. Small Business Administration: (i) the identity of Buyer; (ii) the ownership percentage(s) of Buyer; (iii) the Tax ID/ EIN for any owner holding 20% or more of the Companies; and (iv) a copy or summary of terms of the Escrow Agreement. The Escrow Agent shall deliver from the Escrow Amount to the Sellers any outstanding balance under the PPP Loan that is forgiven by the SBA, and any remaining PPP Loan amounts that are not forgiven by the SBA shall be paid to the SBA in reduction of the PPP Loan.

ARTICLE VII
CONDITIONS TO OBLIGATIONS TO CLOSE

7.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the Acquisition is subject to the satisfaction or waiver by the Buyer of the following conditions:

(a) The representations and warranties of the Sellers set forth in this Agreement will be true and correct in all respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties speak as of another date, in which case such representations and warranties will be true and correct as of such other date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Buyer will have received a certificate signed by the Sellers to such effect.

(b) Each of the Sellers and each of the Companies will have performed all of the covenants required to be performed by it under this Agreement at or prior to the Closing, except where the failure to perform does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or materially adversely affect the ability of each of the Sellers and the Companies to consummate the Acquisition or perform its other obligations hereunder. The Buyer will have received a certificate signed by the Sellers to such effect.

(c) There shall not have been any occurrence, event, incident, action, failure to act, or transaction since the date of the execution of this Agreement which has had or is reasonably likely to cause a Material Adverse Effect.

(d) All applicable waiting periods (and any extensions thereof) will have expired or otherwise been terminated, and the Parties hereto will have received all other authorizations, consents and approvals of all Governmental Entities in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby.

(e) No temporary, preliminary or permanent restraining Order preventing the consummation of the Acquisition will be in effect.

(f) Each Party, as appropriate, shall have obtained any required consents, permits, licenses, approvals or notifications of any lenders, lessors, suppliers, customers or other third parties for which the Buyer will assume responsibility for properly completing any and all necessary forms required when applying for and securing any necessary transfers.

(g) The Sellers shall have obtained releases of any Liens against any of the assets of the Companies (other than Permitted Liens), at the Sellers’ expense.

(h) The Buyer shall have received such pay-off letters and releases relating to the indebtedness as it shall have requested, and such pay-off letters shall be in form and substance satisfactory to it.

(i) The Companies shall have delivered evidence reasonably satisfactory to the Buyer of the Companies’ corporate organization and proceedings and its existence in the jurisdiction in which it is incorporated, including evidence of such existence as of the Closing.

(j) The Buyer shall have obtained on terms and conditions satisfactory to it all of the financing it needs in order to consummate the transactions contemplated hereby and fund the working capital requirements of the Companies after the Closing.

(k) The Buyer shall have entered into an employment agreement with the Seller Representative on terms and subject to conditions to be mutually agreed upon.

(l) All actions to be taken by the Sellers in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be satisfactory in form and substance to the Buyer.

(m) The Parties shall have completed the Inventory Count and agreed on the Inventory Value in accordance with Section 6.13 of this Agreement.

7.2 Conditions to Obligation of the Sellers. The obligation of the Sellers to consummate the Acquisition is subject to the satisfaction or waiver by the Sellers of the following conditions:

(a) The representations and warranties of the Buyer set forth in this Agreement will be true and correct in all respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties speak as of another date, in which case such representations and warranties will be true and correct as of such other date), except where the failure of such representations and warranties to be so true and correct does not adversely affect the ability of the Buyer to consummate the Acquisition and the other transactions contemplated by this Agreement. The Sellers will have received a certificate signed on behalf of the Buyer by a duly authorized officer of the Buyer to such effect.

(b) The Buyer will have performed in all material respects all of the covenants required to be performed by it under this Agreement at or prior to the Closing except such failures to perform as do not materially adversely affect the ability of the Buyer to consummate the Acquisition and the other transactions contemplated by this Agreement. The Sellers will have received a certificate signed on behalf of the Buyer by a duly authorized officer of the Buyer to such effect.

(c) All applicable waiting periods (and any extensions thereof) will have expired or otherwise been terminated and the Parties hereto will have received all other authorizations, consents and approvals of all Governmental Entities in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby.

(d) No temporary, preliminary or permanent restraining Order preventing the consummation of the Acquisition will be in effect.

(e) Each Party, as appropriate, shall have obtained any required consents, permits, licenses, approvals or notifications of any Governmental Entities, lenders, lessors, suppliers, customers or other third parties for which the Buyer will assume responsibility for properly completing any and all necessary forms required when applying for and securing any necessary transfers.

(f) The Seller Representative shall have entered into an employment agreement with the Buyer on terms and subject to conditions to be mutually agreed upon.

(g) All actions to be taken by the Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be satisfactory in form and substance to the Sellers.

(h) The Parties shall have completed the Inventory Count and agreed on the Inventory Value in accordance with Section 6.13 of this Agreement.

ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER

8.1 Termination of Agreement. This Agreement may be terminated as follows:

(a) by mutual written consent of the Buyer and the Sellers at any time prior to the Closing;

(b) by either the Buyer or the Sellers if any Governmental Entity will have issued an Order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement;

(c) by either the Buyer or the Sellers if the Closing does not occur on or before December 31, 2020; provided that the right to terminate this Agreement under this Section 8.1(c) will not be available to any Party whose breach of any provision of this Agreement results in the failure of the Closing to occur by such time;

(d) by the Buyer if the Sellers or the Companies have breached their respective representations and warranties or any covenant or other agreement to be performed by it in a manner such that the Closing conditions set forth in Section 7.1(a) or 7.1(b) would not be satisfied; or

(e) by the Sellers if the Buyer has breached its representations and warranties or any covenant or other agreement to be performed by it in a manner such that the Closing conditions set forth in Section 7.2(a) or 7.2(b) would not be satisfied.

8.2 Effect of Termination. In the event of termination of this Agreement by either the Sellers or the Buyer as provided in Section 8.1, this Agreement will forthwith become void and have no effect, without any Liability (other than with respect to any suit for breach of this Agreement) on the part of the Buyer, the Companies or the Sellers (or any stockholder, agent, consultant or Representative of any such Party); provided, that the provisions of Sections 10.1, 10.6, 10.7, 10.8, 10.11, 10.13, 10.15 and this Section 8.2 will survive any termination hereof pursuant to Section 8.1.

8.3 Amendments. This Agreement may not be amended except by an instrument in writing signed on behalf of the Buyer, the Companies and the Sellers.

8.4 Waiver. At any time prior to the Closing, the Buyer may (a) extend the time for the performance of any of the covenants, obligations or other acts of the Sellers and the Companies or (b) waive any inaccuracy of any representations or warranties or compliance with any of the agreements, covenants or conditions of the Sellers or any conditions to its own obligations. Any agreement on the part of the Buyer to any such extension or waiver will be valid only if such waiver is set forth in an instrument in writing signed on its behalf by its duly authorized officer. At any time prior to the Closing, the Sellers and the Companies, may (a) extend the time for the performance of any of the covenants, obligations or other acts of the Buyer or (b) waive any inaccuracy of any representations or warranties or compliance with any of the agreements, covenants or conditions of the Buyer or any conditions to their own obligations. Any agreement on the part of the Sellers and the Companies to any such extension or waiver will be valid only if such waiver is set forth in an instrument in writing signed by the Sellers and the Companies. The failure of any Party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. The waiver of any such right with respect to particular facts and other circumstances will not be deemed a waiver with respect to any other facts and circumstances, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time.

ARTICLE IX
INDEMNIFICATION

9.1 Survival. The representations and warranties made herein and in any certificate delivered in connection herewith shall survive for a period fifteen (15) months following the Closing Date, at which time they shall expire; provided, however, that (i) the representations and warranties set forth in Sections 3.1 (Authority and Enforceability), 3.3 (The Shares), 3.4 (Broker’s Fees), 4.1 (Organization, Qualification and Corporate Power; Authority and Enforceability), 4.3 (Capitalization), and 4.17 (Environmental) of this Agreement (the “Fundamental Representations”) shall survive indefinitely and (ii) the representations and warranties in Section 4.6 (Taxes) of this Agreement shall survive until the expiration of the applicable statute of limitations. If written notice of a claim has been given prior to the expiration of the applicable representations and warranties, then notwithstanding any statement herein to the contrary, the relevant representations and warranties shall survive as to such claim, until such claim is finally resolved. Unless a specified period is set forth in this Agreement (in which event such specified period will control), all agreements and covenants contained in this Agreement will survive the Closing and remain in effect indefinitely.

9.2 Indemnification by Sellers. From and after the Closing, the Sellers shall indemnify, defend and save Buyer and its Affiliates, stockholders, officers, directors, employees, agents and representatives (each, a “Buyer Indemnified Party” and collectively, the “Buyer Indemnified Parties”) harmless from and against any and all liabilities, deficiencies, demands, claims, Actions, assessments, losses, costs, expenses, interest, fines, penalties and damages (including fees and expenses of attorneys and accountants and costs of investigation) (individually and collectively, the “Losses”) suffered, sustained or incurred by any Buyer Indemnified Party arising out of or otherwise by virtue of: (a) any breach of any of the representations or warranties of the Sellers or the Companies contained in Article III or IV of this Agreement or (b) the failure of the Sellers to perform any of his or her covenants or obligations contained in this Agreement.

9.3 Indemnification by Buyer. From and after the Closing, the Buyer agrees to indemnify, defend and save the Sellers and to the extent applicable, the Sellers’ Affiliates, employees, agents and representatives (each, a “Sellers Indemnified Party” and collectively the “Sellers Indemnified Parties”) harmless from and against any and all Losses sustained or incurred by any Sellers Indemnified Party arising out of or otherwise by virtue of: (a) any breach of any of the representations and warranties of Buyer contained in Article V of this Agreement or (b) the failure of Buyer to perform any of its covenants or obligations contained in this Agreement.

9.4 Indemnification Procedure.

(a) If a Buyer Indemnified Party or a Sellers Indemnified Party seeks indemnification under this Article IX, such party (the “Indemnified Party”) shall give written notice to the other party (the “Indemnifying Party”) of the facts and circumstances giving rise to the claim. In that regard, if any Action, Liability or obligation shall be brought or asserted by any third party which, if adversely determined, would entitle the Indemnified Party to indemnity pursuant to this Article IX (a “Third-Party Claim”), the Indemnified Party shall promptly notify the Indemnifying Party of such Third-Party Claim in writing, specifying the basis of such claim and the facts pertaining thereto, and the Indemnifying Party, if the Indemnifying Party so elects, shall assume and control the defense thereof (and shall consult with the Indemnified Party with respect thereto), including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all necessary expenses. If the Indemnifying Party elects to assume control of the defense of a Third-Party Claim, the Indemnified Party shall have the right to employ counsel separate from counsel employed by the Indemnifying Party in any such action and to participate in the defense thereof, but the fees and expenses of such counsel employed by the Indemnified Party shall be at the expense of the Indemnified Party unless (i) the Indemnifying Party has been advised by the Indemnifying Party’s counsel that a reasonable likelihood exists of a conflict of interest between the Indemnifying Party and the Indemnified Party, or (ii) the Indemnifying Party has failed to assume the defense and employ counsel; in which case the fees and expenses of the Indemnified Party’s counsel shall be paid by the Indemnifying Party. All claims other than Third-Party Claims (a “Direct Claim”) may be asserted by the Indemnified Party giving notice to the Indemnifying Party. Absent an emergency or other extenuating circumstance, the Indemnified Party shall give written notice to the Indemnifying Party of such Direct Claim prior to taking any material actions to remedy such Direct Claim.

(b) In no event shall the Indemnified Party pay or enter into any settlement of any claim or consent to any judgment with respect to any Third-Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed) if such settlement or judgment would require the Indemnifying Party to pay any amount. The Indemnifying Party may enter into a settlement or consent to any judgment without the consent of the Indemnified Party so long as (i) such settlement or judgment involves monetary damages only and (ii) a term of the settlement or judgment is that the Person or Persons asserting such Third-Party Claim unconditionally release all Indemnified Parties from all liability with respect to such claim; otherwise the consent of the Indemnified Party shall be required in order to enter into any settlement of, or consent to the entry of a judgment with respect to, any Third-Party Claim, which consent shall not be unreasonably withheld, conditioned or delayed.

9.5 Failure to Give Timely Notice. A failure by an Indemnified Party to provide notice as provided in Section 9.4 will not affect the rights or obligations of any Person except and only to the extent that, as a result of such failure, any Person entitled to receive such notice was damaged as a result of such failure to give timely notice. Nothing contained in this Section 9.5 shall be deemed to extend the period for which Sellers’ representations and warranties will survive Closing as set forth in Section 9.1 above.

9.6 Limitation on Indemnification Obligation. Notwithstanding anything in this Agreement to the contrary, the liability of the Sellers to the Buyer Indemnified Parties with respect to claims for indemnification pursuant to Section 9.2(a) (but not with respect to the Fundamental Representations for which recovery shall not be so limited) is subject to the following limitations:

(a) The Sellers shall not, in the aggregate, be liable to the Buyer Indemnified Parties for Losses arising under Section 9.2(a) (other than with respect to acts of fraud or the Fundamental Representations for which recovery shall not be so limited) to the extent that the amounts otherwise indemnifiable for such breaches exceeds $1,825,000.

(b) The Sellers shall not be liable to the Buyer Indemnified Parties for Losses arising under Section 9.2(a) (other than with respect to acts of fraud or Fundamental Representations for which recovery shall not be so limited) until and unless the aggregate amounts indemnifiable for such breaches exceeds $100,000. In the event the Buyer Indemnified Parties’ claim for Losses, in the aggregate, exceed $100,000, the Buyer Indemnified Parties shall be entitled to the amount of such Losses that exceeds the $100,000 threshold.

(c) The Sellers shall not be liable to the Buyer Indemnified Parties for Losses arising under Section 9.2 unless the claim therefor is asserted in writing on or prior to the expiration of the applicable representations and warranties.

(d) Losses otherwise subject to indemnity hereunder will be calculated after application of any received insurance proceeds actually received by the Indemnitee (net of costs of recovery).

(e) In no event shall any Indemnifying Party be liable to any Indemnified Party for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple.

9.7 Exclusive Remedies. The Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article IX. In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other Parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article IX. Nothing in this Section 9.7 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled pursuant to Section 10.13.

9.8 Payments. Payments of all amounts owing by an Indemnifying Party under this Article IX shall be made promptly upon the determination in accordance with this Article IX that an indemnification obligation is owing by the Indemnifying Party to the Indemnified Party.

ARTICLE X
MISCELLANEOUS

10.1 Press Releases and Public Announcement. Neither the Buyer on the one hand, nor the Sellers or the Companies on the other, will issue any press release or make any public announcement relating to this Agreement, the Acquisition or the other transactions contemplated by this Agreement without the prior written approval of the other Party; provided, however, that the Buyer may make regulatory filings referring to this Agreement or attaching a copy hereof as may be required by applicable law.

10.2 No Third-Party Beneficiaries. This Agreement will not confer any rights or remedies upon any Person other than the Parties hereto and their respective successors and permitted assigns.

10.3 Entire Agreement. This Agreement (including the Exhibits and the Schedules hereto) constitutes the entire agreement among the Parties hereto and supersedes any prior understandings, agreements or representations by or among the Parties hereto, written or oral, to the extent they related in any way to the subject matter hereof.

10.4 Succession and Assignment. This Agreement will be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party hereto may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval, in the case of assignment by the Buyer, by the Sellers, and, in the case of assignment by the Sellers or the Companies, the Buyer.

10.5 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement, and, in the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

10.6 Notices. All notices and other communications that are required or permitted to be given to the Parties under this Agreement shall be sufficient in all respects if given in writing and delivered in person, by electronic mail, by telecopy, by overnight courier, or by certified mail, postage prepaid, return receipt requested, to the receiving Party at the address specified below or to such other address as such Party may have given to the other by notice pursuant to this Section. Notice shall be deemed given on the date of delivery, in the case of personal delivery, electronic mail, or telecopy, or on the delivery or refusal date, as specified on the return receipt in the case of certified mail or on the tracking report in the case of overnight courier.

If to the Buyer: 1847 Wolo Inc.

c/o 1847 Holdings LLC

590 Madison Avenue, 21^st Floor

New York, NY 10022

Attn: Ellery W. Roberts

Email: eroberts@1847holdings.com

with a copy to: Bevilacqua PLLC

1050 Connecticut Avenue, NW

Suite 500

Washington, DC 20036

Attn: Louis A. Bevilacqua

Email: lou@bevilacquapllc.com

Facsimile: 202-869-0889

If to the Companies: Wolo Manufacturing Corp.

1 Saxwood Street

Deer Park, NY, 11729

Attn: Stanley Solow

Email: stan1952@optonline.net

with a copy to: Meltzer, Lippe, Goldstein & Breitstone, LLP

Attn: Ira Halperin , Esq.

190 Willis Ave

Mineola, NY 11501

Facsimile (516) 747-0653

Email ihalperin@meltzerlippe.com

If to the Sellers or

Seller Representative: Stanley Solow

1 Saxwood Street

Deer Park, NY, 11729

Attn: Stanley Solow

Email: stan1952@optonline.net

with a copy to: Meltzer, Lippe, Goldstein & Breitstone, LLP

Attn: Ira Halperin , Esq.

190 Willis Ave

Mineola, NY 11501

Facsimile (516) 747-0653

Email ihalperin@meltzerlippe.com

Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner set forth herein.

10.7 Governing Law. This Agreement will be governed by, and construed in accordance with, the Laws of the State of New York without giving effect to any choice of Law or conflict of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.

10.8 Consent to Jurisdiction and Service of Process. EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN OR HAVING JURISDICTION OVER THE STATE OF NEW YORK, COUNTIES OF NASSAU AND SUFFOLK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE ACQUISITION OR THE OTHER TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE ACQUISITION OR THE OTHER TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN WILL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.

10.9 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Agreement.

10.10   Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms of such illegal, invalid or unenforceable provision as may be possible.

10.11   Expenses. Except as otherwise provided in this Agreement, whether or not the Acquisition is consummated, all expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the Party incurring such expenses. As used in this Agreement, “expenses” means the out-of-pocket fees and expenses of the financial advisor, counsel and accountants incurred in connection with this Agreement and the transactions contemplated hereby.

10.12   Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

10.13   Specific Performance. The Parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties will be entitled to specific performance of the terms hereof in addition to any other remedy at Law or equity.

10.14   Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

10.15   Seller Representative. The Sellers hereby appoint and constitute Stanley Solow as the “Seller Representative” hereunder, to exercise the powers on behalf of the Sellers set forth in this Agreement, and Stanley Solow hereby accepts such appointment. The Sellers, by execution of this Agreement, each hereby constitute and appoint the Seller Representative his or her true and lawful attorney in fact, with full power in his or her name and on his or her behalf, in the absolute discretion of Seller Representative: (i) to act on behalf of the Sellers according to the terms of this Agreement; (ii) to give and receive notices on behalf of the Sellers; (iii) to act on behalf of the Sellers in connection with any matter as to which Sellers are an “Indemnified Party” or “Indemnifying Party” under Article IX; and (iv) in general, to do all things and to perform all acts, including executing and delivering all agreements, certificates, receipts, instructions, and other instruments contemplated by or deemed advisable in connection with this Agreement. This power of attorney, and all authority hereby conferred, is granted subject to the interests of Buyer hereunder and in consideration of the mutual covenants and agreements made herein and will be irrevocable and will not be terminated by any act of the Sellers or by operation of Law or by the occurrence of any other event. All action taken by Seller Representative hereunder will be final and binding upon the Sellers. The Sellers agree to hold the Seller Representative free and harmless from any and all loss, damage, or liability that they, or any one of them, may sustain as a result of any action taken in good faith by Seller Representative hereunder.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first above written.

Exhibit 10.2

AMENDMENT NO. 1

TO THE

STOCK PURCHASE AGREEMENT

AMENDMENT NO. 1 TO THE STOCK PURCHASE AGREEMENT, dated March __, 2021 (the “Amendment”), among 1847 Wolo Inc., a Delaware corporation (the “Buyer”), Wolo Manufacturing Corp., a New York corporation, and Wolo Industrial Horn & Signal, Inc., a New York corporation (each, a “Company” and together, the “Companies”), Barbara Solow and Stanley Solow, as the shareholders of the Companies (each, a “Seller” and together, the “Sellers”), nd Stanley Solow, in his capacity as the Seller Representative, and 1847 Holdings LLC, a Delaware limited liability company (“Buyer Parent”). Each of the Buyer, the Companies, the Sellers and the Seller Representative are sometimes referred to in this Amendment individually as a “Party” and, collectively, as the “Parties.”

RECITALS

A. The Parties have previously entered into that certain Stock Purchase Agreement, dated as of December 22, 2020 (the “Stock Purchase Agreement”).

B. The Parties desire to amend the Stock Purchase Agreement as set forth herein.

C. Pursuant to Section 8.3 of the Stock Purchase Agreement, the Stock Purchase Agreement may be amended by the Parties only by an instrument in writing signed on behalf of the Buyer, the Companies and the Sellers.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree to the following:

1. Definitions. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Stock Purchase Agreement, as applicable.

2. Amendments.

A. Section 1.1 as set forth in the Stock Purchase Agreement shall be amended as follows:

““Inventory Value” means the value of the Inventory as of the Closing Date, as reflected on the books and records of the Companies and agreed to by the Parties at or prior to the Closing.”

B. Section 2.1 as set forth in the Stock Purchase Agreement shall be amended and restated in its entirety to read as follows:

“2.1 Purchase and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing the Sellers will sell, transfer and deliver, and the Buyer will purchase from the Sellers, all of the Shares for an aggregate purchase price of Seven Million Four Hundred Thousand Dollars ($7,400,000) (the “Purchase Price”), subject to adjustment as described in Section 2.2, consisting of: (i) Six Million Five Hundred Fifty Thousand Dollars ($6,550,000) in cash (the “Cash Portion”), and (ii) The Buyer Note (as defined below), in the aggregate principal amount of Eight Hundred Fifty Thousand Dollars ($850,000).

(a) At the Closing, the Buyer will deliver to each of the Sellers, in immediately available funds to the account(s) designated by the Seller Representative prior to the Closing, an amount equal to their respective Pro Rata Share of the Cash Portion (the “Closing Payment”).

(b) At the Closing, the Buyer will deliver to the Sellers a promissory note in the aggregate principal amount of Eight Hundred Fifty Thousand Dollars ($850,000) in the form set forth on Exhibit A of this Amendment (the “Buyer Note”).

(c) At the Closing, the Seller Representative will deliver to the Buyer, or other party designated by the Buyer, a certificate or certificates representing the Shares, in original form, duly endorsed or accompanied by stock powers duly endorsed in blank.”

C. Section 2.3 as set forth in the Stock Purchase Agreement shall be amended and restated in its entirety to read as follows:

“The consummation of the Acquisition (the “Closing”) will take place by the reciprocal delivery of closing documents by electronic mail, regular mail, fax or any other means mutually agreed upon by the Parties hereto on a date that is no later than two (2) Business Days immediately following the day on which the last of the conditions to closing contained in Article VII (other than any conditions that by their nature are to be satisfied at the Closing) is satisfied or waived in accordance with this Agreement or at such other location or on such other date as the Buyer and the Seller Representative may mutually determine (the date on which the Closing actually occurs is referred to as the “Closing Date”). Notwithstanding the foregoing, it is the intent of the Parties that the Closing shall occur on or prior to December 31, 2020. In the event that the Closing occurs following December 31, 2020, Buyer shall indemnify and hold harmless Sellers for any amounts in respect of Taxes payable by Sellers in connection with the transactions contemplated by this Agreement that are in excess of the amounts in respect of Taxes that would have been payable by Sellers in connection with the transactions contemplated by this Agreement if the Closing had occurred and the entire Purchase Price had been paid to Sellers in cash on or prior to December 31, 2020.”

D. Section 2.4(a) as set forth in the Stock Purchase Agreement shall be amended and restated in its entirety to read as follows:

“(a) At the Closing, the Buyer will (i) pay to each Seller, their respective Closing Payment, adjusted in accordance with subsection 2.2(a)(ii), subsection 2.2(b) and subsection 2.2(c) above, by paying such sum to the Sellers by transfer of immediately available funds in accordance with instructions provided by the Seller Representative, (ii) issue to the Seller the Buyer Note, and (iii) deliver to the Sellers all other documents, instruments or certificates required to be delivered by the Buyer at or prior to the Closing pursuant to Section 7.2 of this Agreement.”

E. Section 2.4(b) of the Stock Purchase Agreement is hereby deleted in its entirety.

F. Section 2.4(c) as set forth in the Stock Purchase Agreement shall be amended and restated in its entirety to read as follows:

“(c) At the Closing, each Seller will deliver to the Buyer (i) a certificate or certificates representing his or her Shares duly endorsed or accompanied by stock powers duly endorsed in blank in accordance with Section 2.1(c), and (ii) all other documents, instruments or certificates required to be delivered by the Sellers at or prior to the Closing pursuant to Section 7.1 of this Agreement.”

G. Section 6.13 of the Stock Purchase Agreement is hereby deleted in its entirety.

E. Section 6.14 of the Stock Purchase Agreement is hereby deleted in its entirety.

F. Section 7.1(m) of the Stock Purchase Agreement is hereby deleted in its entirety.

G. Section 7.2(h) of the Stock Purchase Agreement is hereby deleted in its entirety.

3. Effect of Amendment. Except as amended as set forth above, the Stock Purchase Agreement shall continue in full force and effect.

4. Counterparts. This Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

5. Governing Law. This Amendment will be governed by, and construed in accordance with, the Laws of the State of New York, without giving effect to any choice of Law or conflict of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed as of the date first above written.

EXHIBIT A

Form of 6% Promissory Note

(See attached)

5

Exhibit 10.3

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

1847 WOLO INC.

6% SECURED PROMISSORY NOTE

FOR VALUE RECEIVED, 1847 Wolo Inc., a Delaware corporation, Wolo Manufacturing Corp. and Wolo Industrial Horn & Signal, Inc. (jointly and severally, the “Company”), promise to pay to Barbara Solow and Stanley Solow (collectively, the “Holder”), the principal sum of Eight Hundred Fifty Thousand Dollars ($850,000) (the “Principal”) in lawful money of the United States of America, with interest payable on the outstanding Principal amount at the simple rate of six percent (6%) per annum. The unpaid Principal and all accrued but unpaid interest thereon shall be paid in full to the Holder on the thirty-ninth (39^th) month following the date of this Note (the “Maturity Date”).

Capitalized terms used herein but not defined herein shall have the meaning ascribed to them in that certain Stock Purchase Agreement, dated December 22, 2020, as amended by the Amendment No. 1 to the Stock Purchase Agreement, dated _________, 2021 (as so amended, the “Purchase Agreement”), among the Holder and the Company, pursuant to which the Company is acquiring the Shares from the Holder.

The following is a statement of the rights of the Holder of this Note and the terms and conditions to which this Note is subject, and to which the Holder, by acceptance of this Note, agrees:

1. Principal Repayment. . The Principal along with any accrued, but unpaid interest shall be paid in one lump sum on the Maturity Date.

2. Interest. Interest (the “Interest”) shall be paid quarterly on the Principal from the date hereof until such Principal is repaid in full at the simple interest rate of six percent (6%) per annum, which payments are due on the last business day of March, June, September and December for each year that the Note is outstanding. Any accrued, but unpaid, Interest is payable at Maturity. All computations of the Interest rate hereunder shall be made on the basis of a 360-day year of twelve 30-day months. In the event that any Interest rate provided for herein shall be determined to be unlawful, such Interest rate shall be computed at the highest rate permitted by applicable law. Any payment by the Company of any Interest amount in excess of that permitted by law shall be considered a mistake, with the excess being applied to the Principal of this Note without prepayment premium or penalty.

3. Redemption. The Company will have the right to redeem all or any portion of the Note at any time prior to the Maturity Date without premium or penalty of any kind. The redemption price will be payable in cash and is equal to the then outstanding principal amount of this Note plus accrued but unpaid interest thereon.

4. Security for Note.

(a) To secure the payment of the indebtedness evidenced by this Note, all of the obligations and liabilities of the Company to Holder hereunder (individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising), together with payment of all costs and expenses incurred by Holder in the collection of this Note and the enforcement of its rights hereunder (collectively, the “Obligations”), Each Company (excluding 1847 Wolo Inc.) hereby grants to Holder a security interest in and a lien on all of such Company’s right, title and interest in and to all of the assets of such Company now owned or hereafter acquired by Company, including all of the proceeds and products thereof (the “Collateral”).

(b) Subject to the Subordination Agreement (as hereinafter defined), so long as any Obligations are outstanding, Company covenants and agrees that it will not pledge, sell, lease, assign, transfer, or otherwise dispose of the Collateral or any portion thereof (whether in one transaction or in a series of transactions) to any other individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, or government (or any agency or political subdivision), except for liens in favor of Sterling National Bank (the “Bank”), sales in the ordinary course of business, and shall defend its title to the Collateral and the security interest of Holder therein against the claims of any person (other than the Bank) claiming rights in the Collateral against or through Company and maintain and preserve Holder’s security interest in the Collateral and its priority thereto.

(c) Company (excluding 1847 Wolo Inc.) irrevocably authorizes Holder at any time and from time to time to file and maintain in the State of New York and in any other filing office in any jurisdiction, initial financing statements and amendments thereto that reflect the security interest that is granted pursuant to this Note. Holder shall have all rights of a secured party under the Uniform Commercial Code as in effect from time to time in the State of New York (the “UCC”).

(d) Company (excluding 1847 Wolo Inc.) hereby irrevocably constitutes and appoints Holder and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment is coupled with an interest) with full irrevocable power and authority in the place and stead of Company or in Holder’s own name, with the right but not the duty to perform any and all acts and things which Holder in its sole and absolute discretion may deem necessary or appropriate from time to time to create, prepare, complete, execute, deliver, perfect, endorse or file in the name and on behalf of Company any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Company under this Section 4(b).

(e) The powers conferred on Holder pursuant to this Note are solely to perfect the security interest in the Collateral and shall not impose any duty upon Holder to exercise any such powers. Holder shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither Holder nor any of its affiliates, designees, employees or agents shall be responsible to Company for any act or failure to act.

(f) Company hereby acknowledges that Holder is entitled to equitable and injunctive relief to enforce any of its rights and remedies hereunder or under the UCC and Company hereby waives any defense to such equitable or injunctive relief based upon any allegation of the absence of irreparable harm to Holder.

5. Events of Default. In the event that any of the following (each, an “Event of Default”) shall occur:

(a) Non-Payment. The Company shall default in the payment of the unpaid Principal of, or accrued Interest on the unpaid Principal of, this Note as and when the same shall become due and payable, whether by acceleration or otherwise; or

(b) Default in Covenants. The Company shall default in any material manner in the observance or performance of any covenants or agreements set forth in the Purchase Agreement, this Note, or any other agreement entered into in connection with the transactions contemplated by the Purchase Agreement (collectively, the “Transaction Documents”); or

(c) Breach of Representations and Warranties. The Company materially breaches any representation or warranty contained in the Transaction Documents;

(d) Bankruptcy. The Company shall: (i) admit in writing its inability to pay its debts as they become due; (ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any of its property, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for any part of its property; or (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if such case or proceeding is not commenced by the Company or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Company or shall result in the entry of an order for relief;

(e) Sale of Collateral. The Company shall sell, transfer or assign any of the Collateral, to a person other than the Bank, outside of the ordinary course of business; or

(f) Sale of the Company. The Company shall sell, transfer or assign all or a substantial portion of its assets or equity securities to a person other than the Bank.

then, and so long as such Event of Default is continuing for a period of two (2) business days in the case of non-payment under Section 4(a), or for a period of ten (10) calendar days in the case of events under Sections 4(b) and 4(c) (and the event which would constitute such Event of Default, if curable, has not been cured), by written notice to the Company from the Holder of the Note then outstanding (or from any collateral agent acting on behalf of such Holder), all obligations of the Company under this Note shall be immediately due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, and Holder may exercise any other remedies the Holder may have at law or in equity, including any rights Holder may have as a secured party under the UCC. If an Event of Default specified in Section 4(d) above occurs, the principal of, and accrued interest on, the Note, less any prepaid amounts under Section 1, shall automatically, and without any declaration or other action on the part of any Holder, become immediately due and payable.

6. Subordination. The payment of this Note, both principal and interest, and all other indebtedness evidenced hereby, is subject to the prior rights of the Bank under that certain credit agreement with Company, of even date herewith, in accordance with the terms and conditions set forth in that certain subordination agreement, dated as of the date hereof (the “Subordination Agreement”), by and among the Bank, the Company, as “Company” and the Holder, as “Creditor”. Any holder of this Note acknowledges and agrees that this Note and the rights of Holder hereunder are subject to the Subordination Agreement.

7. Mutilated, Destroyed, Lost or Stolen Note. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, the Holder shall surrender such Note to the Company. In the case of any destroyed, lost or stolen Note, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

8. Holder Not Deemed a Stockholder. No Holder, as such, of this Note shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder hereof, as such, any of the rights at law of a stockholder of the Company.

9. Mutilated, Destroyed, Lost or Stolen Note. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate. In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company. In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

10. Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

11. Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

12. Assignment. The rights and obligations of the Company and the Holder of this Note shall be binding upon, and inure to the benefit of, the successors and permitted assigns of the parties hereto. To complete an assignment or transfer this Note, the Holder shall deliver a completed and executed Form of Assignment attached hereto as Exhibit A and surrender and deliver this Note, duly endorsed, to the Company’s office or such other address which the Company shall designate, upon receipt of which a new Note, in substantially the form of this Note (any such new Note, a “New Note”), evidencing the portion of this Note so transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Note by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Note that the Holder has in respect of this Note. Interest and principal are payable only to the registered Holder of this Note set forth on the books and records of the Company.

13. Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

14. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if given in accordance with the provisions of the Purchase Agreement.

15. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced solely and exclusively in accordance with the laws of the State of New York without regard to any statutory or common-law provision pertaining to conflicts of laws. The Parties agree that state and federal courts of competent jurisdiction in the State of New York shall have concurrent jurisdiction for purposes of entering temporary, preliminary and permanent injunctive relief with regard to any action arising out of any breach or alleged breach of the Note. The Parties agree to submit to the personal jurisdiction of such courts and any other applicable court within the State of New York. The Parties waive any claim that that any of the foregoing courts is an inconvenient forum.

16. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

17. Headings. Section headings in this Note are for convenience only, and shall not be used in the construction of this Note.

18. Fees and Costs. The Company, in case of suit on this Note, agrees to pay to Holder the reasonable attorney's fees and the costs of collection.

[Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first above written.

Exhibit A

FORM of assignment

TO: 1847 Wolo Inc., Wolo Manufacturing Corp. and Wolo Industrial Horn & Signal, Inc.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________ (name), __________________________________________ (address), US$____________ of 6% Promissory Note (“Note”) of 1847 Wolo Inc., Wolo Manufacturing Corp. and Wolo Industrial Horn & Signal, Inc. (jointly and severally the “Company”), including any and all accrued and unpaid interest owing thereon, registered in the name of the undersigned on the records of the Company represented by the within certificate, and irrevocably appoints ___________________ the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.

DATED this ________ day of, __________________, 20 ____.

Instructions:

8

Exhibit 10.4

SUBORDINATION AND STANDBY AGREEMENT

THIS SUBORDINATION AND STANDBY AGREEMENT (this “Agreement”), dated as of March 30, 2021, between STERLING NATIONAL BANK, a national banking association, having an office at 400 Rella Boulevard, Montebello, New York 10901 (the “Lender”), 1847 WOLO INC, a corporation with an address at c/o 1847 Holdings LLC, 590 Madison Avenue, 21^st Floor, New York, New York 10022, WOLO MFG CORP. AND WOLO INDUSTRIAL HORN & SIGNAL, INC., each a corporation with an address at 1 Saxwood Street, Deer Park, New York 11729 (collectively, the “Borrower”), and BARBARA SOLOW AND STANLEY SOLOW, each with an address at 65 Shelter Hill Road, Plainview, New York 11803 (collectively, the “Standby Creditor”).

PRELIMINARY STATEMENT. The Lender has agreed to make loans and extensions of credit (collectively, the “Loan”) to the Borrower in the principal amount of up to the Lender’s Credit Limit (defined below) evidenced by notes of the Borrower for such amounts, (collectively, the “Note”) pursuant to a credit agreement between the Lender and the Borrower (the “Credit Agreement”) and secured by, among other things, the Security Documents defined in the Credit Agreement (collectively, the “Security Document”) encumbering, inter alia, all personal property of each Borrower. Capitalized terms not otherwise defined herein shall have the meanings set forth in in the Credit Agreement.

In order to induce the Lender to make the Loan available to the Borrower, the Lender requires that the Borrower and Standby Creditor shall have executed and delivered this Agreement.

The Borrower has agreed to be indebted to the Standby Creditor in the principal sum of the Standby Creditor’s Credit Limit (the “Subordinated Debt”), pursuant to a certain promissory note issued by the Borrower to the Standby Creditor dated as of March 30, 2021, a copy of which is annexed hereto as Exhibit A (the “Subordinated Note”).

NOW, THEREFORE, in consideration of the Obligations defined below and the Collateral securing same, and in order to induce the Lender to make each Loan available to the Borrower, the Standby Creditor, the Lender and the Borrower hereby agree as follows:

SECTION 1. Definitions.

“Claim” means (i) any demand, maturity or acceleration of the Obligations or the Subordinated Debt, (ii) any enforcement of any rights or remedies following a default under the Obligations or the Subordinated Debt, (iii) any imposition of default interest, late fees or penalties with respect to the foregoing or (iv) any demand, claim, proceeding, litigation, judgment, award, order or other disposition with respect to the foregoing.

“Collateral” shall have the meaning set forth in the Credit Agreement, and includes, inter alia, the personal property of each Borrower.

“Credit Limit” means (i) with respect to Lender, a revolving credit facility in the principal amount of up to $1,000,000 at any time outstanding (which amount may be borrowed, repaid and reborrowed), and a term loan in the principal amount of $3,550,000 (which amount may not be reborrowed, and which principal amount shall be reduced by each principal payment by Borrower to Lender); and (ii) with respect to Standby Creditor, a $850,000 term loan (which amount may not be reborrowed and which principal amount shall be reduced by each principal payment made to Standby Creditor by Borrower).

“Lender’s Cure Rights” means, if Borrower defaults under the Subordinated Note, and such default continues without cure beyond any notice requirement or cure period provided to Borrower under the Subordinated Note, Standby Creditor shall provide written notice to Lender and a 30 day period to cure such Borrower default.

“Lien” shall have the meaning set forth in the Credit Agreement.

“Loan Documents” shall have the meaning set forth in the Credit Agreement.

“Permitted Payment” means a regularly scheduled payment of interest-only in arrears pursuant to the Subordinated Note at a fixed rate per annum not to exceed six (6.0%) percent, provided that if a Default or Event of Default exists under the Credit Agreement, no payments from any Borrower or person acting on behalf of Borrower may be paid to or received by Standby Creditor. Except as otherwise expressly provided in Section 27 hereof, payments to Standby Creditor of principal, default interest, balloon loan payments, protective advances, late fees, penalties, expenses, accelerated payments of interest or principal, and any similar payments are prohibited without Lender’s express prior written consent.

“Obligations” means each Loan together with all liabilities and obligations of each Borrower to the Lender, now or hereafter existing under the Credit Agreement, the Notes and the Loan Documents, as same may be amended, modified or renewed from time to time, provided that, the principal amount of the Obligations shall not exceed the Lender Credit Limit.

“Operating Borrower” means the Borrower excluding 1847 Wolo Inc.

“Standby Default” means Borrower’s default under the Subordinated Note, which default continues without cure beyond (i) any notice requirement or cure period afforded to Borrower under the Subordinated Note, and (ii) the expiration of Lender’s Cure Rights.

“Standby Period” means a period of 90 days, commencing on the date that a Standby Default exists.

“Standby Violation” means a breach by Standby Creditor of the provisions of this Agreement.

“Standby Violation Date” means five (5) days after written notice of Standby Violation from Lender to Standby Creditor.

SECTION 2. Representations and Warranties. The Borrower and each Standby Creditor each represents and warrants:

(a) That as of the date hereof, the total principal amount of the Subordinated Debt does not exceed the Standby Creditor Credit Limit;

(b) That no part of the Subordinated Debt (and any support or security therefor) is evidenced by any document, instrument, security or other writing other than the Subordinated Note and a related UCC-1 filing against each Operating Borrower, filed after the filing date of the financing statements in favor of Lender;

(c) That the Standby Creditor is the lawful holder of the Subordinated Debt and holder of the Subordinated Note and no part hereof is subject to any defense, offset or counterclaim;

(d) That the Standby Creditor has not previously assigned or transferred any of the Subordinated Debt, the Subordinated Note or any interest therein;

(e) That the Standby Creditor has not previously given any subordination in respect of any portion of the Subordinated Debt;

(f) That the Subordinated Note matures 39 months from the date of the Subordinated Note;

(g) That the Subordinated Debt is not supported by any guarantee from any person or party; and

(h) That the Subordinated Debt is unsecured except for a lien upon the personal property of Operating Borrowers, which liens and encumbrances in favor of Standby Creditor are at all times subject and subordinate to Liens in favor of Lender and secure a principal sum not to exceed the Standby Creditor’s Credit Limit plus interest accrued thereon.

SECTION 3. Principal Payment and Set Off. Subject to Section 27 of this Agreement, no portion of the principal sum of the Subordinated Debt may be paid by or on behalf of the Borrower in whole or in part while any of the Obligations shall be outstanding, without the prior written consent of the Lender. With respect to any set-off rights against the Subordinated Debt, the Borrower and each Standby Creditor acknowledge and agree that they shall not exercise any right of set off during the occurrence of any Default or Event of Default under the Credit Agreement.

SECTION 4. Acceleration of Subordinated Note. In the event that the Subordinated Note is declared due and payable pursuant to a Claim or otherwise (whether as a result of acceleration, required payment or otherwise), then, subject to Section 27 of this Agreement, the Lender shall be entitled to receive payment in full of the Obligations before the Standby Creditor shall be entitled to receive any payment, directly or indirectly, on account of principal, interest, fees, expenses or premiums due thereon.

SECTION 5. Permitted Payments under Subordinated Note. Provided no Default or Event of Default (as defined in the Credit Agreement) exists, the Borrower shall be permitted to make Permitted Payments. Notwithstanding the foregoing, if any Default or Event of Default exists under the Credit Agreement, neither the Borrower nor any person acting on its behalf shall pay, and the Standby Creditor shall not take, accept or receive from the Borrower or any person acting on its behalf, directly or indirectly, any payments (whether in cash or other property, by way of set-off or in any other manner, including without limitation, from or by way of any Collateral) for or on account of any amount due and payable on account of the Subordinated Note, whether for principal, interest, fees, premiums, expenses or otherwise.

SECTION 6. Security Interests; Standstill. The security interests of the Standby Creditor in the personal property of any Borrower shall, at all times, be subject and subordinate to the security interests and Liens of the Lender upon all Collateral. Any financing statements upon any property of any Borrower in favor of Standby Creditor shall be filed after the financing statements in favor of Lender have been filed. The subordination and priorities specified in this Agreement are applicable irrespective of the time or order of attachment or perfection of the Liens, security interests or other interests referred to herein, the time or order of filing of financing statements, the acquisition of purchase money or other security interests or the time of giving or failure to give notice of the acquisition or expected acquisition of purchase money or other security interests or the perfection or non-perfection of any Lien, security interest or other interest referred to herein, or the avoidability or non-avoidability of any Lien, security interest or other interest referred to herein. As to Lender, Standby Creditor will not claim to hold a purchase money lien in respect of any Collateral. Subject to Section 27 of this Agreement, Standby Creditor shall not enforce any rights or remedies it has or may claim to have against Borrower or any Collateral until Lender has been paid in full on all Obligations. Lender shall have the right but not the obligation to make any payment in connection with Borrower default under the Subordinated Debt, and notwithstanding anything to the contrary contained in the loan documents evidencing such Subordinated Note, such payment by Lender shall be deemed to have cured the default in connection with such payment. Notwithstanding the provisions of Section 27 of this Agreement, any judgment or other Claim obtained by Standby Creditor against any Borrower shall be subject and subordinate at all times to the Liens, security interests and Claims of the Lender.

SECTION 7. Rights Upon Insolvency. In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization, dissolution or other similar proceedings in connection therewith, relative to any Borrower or to its creditors, as such, or its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Borrower, whether or not involving insolvency or bankruptcy, and in the event of any execution sale, then the Lender shall be entitled to receive payment in full of all of the Obligations before the Standby Creditor shall be entitled to receive any payment on account of principal, interest, compensation, expense, fee or premium due under the Subordinated Note and to that end the Lender shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, whether in cash or property or securities or by way of set-off, which may be payable or deliverable in any such proceedings in respect of the Subordinated Note.

SECTION 8. Standby Creditor as Trustee. Should any payment or distribution or security or proceeds therefor be taken, accepted or received directly or indirectly by the Standby Creditor in contravention of this Agreement, the Standby Creditor shall forthwith deliver the same to the Lender in precisely the form received (except for the endorsement or assignment by the Standby Creditor where necessary) for application against the Obligations and, until so delivered, the same shall be held in trust by the Standby Creditor for the sole benefit of the Lender. In the event of the failure of the Standby Creditor to make such endorsement or assignment the Lender is hereby irrevocably authorized to make the same.

SECTION 9. Lender’s Duties. The rights granted to the Lender in this Agreement are solely for its protection and nothing herein contained imposes on the Lender any duties with respect to any property of the Borrower or Standby Creditor heretofore or hereafter received by the Lender beyond the reasonable care in the custody and preservation of such property while in the Lender’s possession.

SECTION 10. No Commencement of Any Claim. Except as otherwise set forth in Section 27 of this Agreement, the Standby Creditor agrees that so long as the Borrower shall be prohibited from making and the Standby Creditor shall be prohibited from taking, accepting or receiving any payments or distributions of any kind and from whatever source on account of the Subordinated Note, the Standby Creditor will not take, sue for, ask or demand from the Borrower payment of all or any of the Subordinated Note. In addition, subject to Section 27 of this Agreement, Standby Creditor shall not commence or join with any creditor other than the Lender in commencing, directly or indirectly, any Claim.

SECTION 11. Agreements in Respect of Subordinated Debt. (a) During the term of this Agreement, the Standby Creditor shall not, without the prior written consent of the Lender:

(i) Cancel or otherwise discharge any of the Subordinated Debt or subordinate any of the Subordinated Debt to any indebtedness of the Borrower other than the Obligations; or

(ii) Sell, assign, pledge, encumber or otherwise dispose of any of the Subordinated Debt unless such sale, assignment, pledge, encumbrance or disposition (A) is to a person or entity other than the Borrower or any of its owners, principals, subsidiaries or affiliates and (B) is made expressly subject to this Agreement; or

(iii) Permit the terms of any of the Subordinated Debt to be increased beyond Standby Creditor’s Credit Limit, modified, amended or supplemented.

(b) The Standby Creditor shall promptly notify the Lender in writing of the occurrence of any default or event of default under the Subordinated Note.

SECTION 12. Subordination Absolute. The Lender’s right to enforce each and every provision hereunder, and the obligations of the Borrower and Standby Creditor arising under this Agreement are absolute and shall not be affected by any subsequent modification, extension, amendment or release of any of the Obligations or any discharge of any other party liable for the Obligations, or any release, exchange or substitution of any collateral securing the Obligations from time to time.

SECTION 13. Obligations Hereunder Not Impaired. All rights and interests of the Lender hereunder and all agreements and obligations of the Standby Creditor and the Borrower under this Agreement shall remain in full force and effect irrespective of:

(i) any lack of validity or enforceability of any of the Obligations, or any other agreement or instrument relating thereto; or

(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to or departure therefrom including, without limitation, any increase in the Obligations (but not an increase to Lender’s Credit Limit) resulting from the extension of additional credit to, or for the account or request of, the Borrower; or

(iii) any amendment or restatement of the Loan Documents (other than increasing the Lender’s Credit Limit) including the taking of additional credit support, the pledge of additional Collateral or the extension of any payment or maturity date; or

(iv) any taking, exchange, release or non-perfection of any security interest in or Lien upon, any Collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Obligations; or

(v) any manner of application of Collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Obligations or any other assets of the Borrower;

(vi) any change, restructuring or termination of the corporate structure or existence of the Borrower; or

(vii) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Borrower or a subordinated creditor.

SECTION 14. Lender Appointed Attorney-in-Fact. The Standby Creditor hereby irrevocably appoints the Lender as the Standby Creditor’s attorney-in-fact, effective from the Standby Violation Date, with full authority in the place and stead of the Standby Creditor and in the name of the Standby Creditor or otherwise, from time to time in the Lender’s discretion, to take any action and to execute any instrument which may be necessary or reasonably advisable to accomplish the purposes of this Agreement. Without limiting the generality of any of the foregoing, effective from the Standby Violation Date, the Lender may without notice to the Standby Creditor or any of its representatives, successors or assigns, perform any of the following acts, at the option of the Lender, at any meeting of creditors of the Borrower or in connection with any case or proceeding, whether voluntary or involuntary, for the distribution, division or application of the assets of the Borrower or the proceeds thereof, regardless of whether such case or proceeding is for the liquidation, dissolution, winding up of affairs, reorganization or arrangement of the Borrower, or for the composition of the creditors of the Borrower, in bankruptcy or in connection with a receivership, or under an assignment for the benefit of creditors of the Borrower or otherwise:

(a) To enforce claims comprising the Subordinated Debt, either in its own name or in the name of the Standby Creditor, by proof of debt, proof of claim, suit or otherwise;

(b) To collect any assets of any Borrower distributed, divided or applied by way of division or payment, or any securities issued, on account of the Subordinated Debt and to apply the same, or the proceeds of any realization upon the same that the Lender in its discretion elects to effect, to the amounts due under the Subordinated Note until all such amounts (including, without limitation, all interest accruing thereon after commencement of any bankruptcy action) have been paid in full, rendering any surplus to the Standby Creditor if and to the extent permitted by law;

(c) To vote claims comprising the Subordinated Debt to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension; and

(d) To take generally any action in connection with any such meeting, case or proceeding that the Standby Creditor would be authorized to take but for this Agreement.

In the event that Lender exercises its rights under this Section 14 after the Standby Violation Date, in no event shall the Lender be liable to the Standby Creditor for any failure to prove the Subordinated Debt, to exercise any right with respect thereto or to collect any sums payable.

SECTION 15. Subrogation Rights. Provided that the Obligations have been fully and finally paid and discharged, the Standby Creditor shall be subrogated to the rights of the Lender to receive payments or distributions of cash, property or securities payable or distributable on account of the Obligations, to the extent of all payments and distributions paid over to or for the benefit of the Lender pursuant to this Agreement.

SECTION 16. Subordination Legend; Further Assurances. The Borrower and Standby Creditor each agree to execute and deliver to the Lender such further instruments, documents and agreements and agree to take such further action as the Lender may at any time or times reasonably request in order to carry out the provisions and intent of this Agreement. The Standby Creditor and the Borrower will each mark its respective books of account in such a manner as shall be effective to give proper notice of the effect of this Agreement.

SECTION 17. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Borrower or Standby Creditor therefrom shall in any event be effective unless the same shall be in writing and signed by the Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 18. No Waiver; Remedies. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any other remedies provided by law.

SECTION 19. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing and mailed or delivered, if to the Borrower at its address set forth above, or if to the Standby Creditor, mailed or addressed to it at 65 Shelter Hill Road, Plainview, New York 11803, and if to the Lender, at its address at One Jericho Plaza, Suite 304, Jericho, New York 11753, Attention: Daniel Liberty, or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall be effective when deposited in the mails or delivered to a reputable overnight delivery service, addressed as aforesaid.

SECTION 20. Expenses. The Borrower agrees to pay the Lender on demand all costs and expenses of every kind, including attorney’s fees, that the Lender may reasonably incur in enforcing any of its rights under this Agreement.

SECTION 21. Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of the parties and their respective successors and assigns.

SECTION 22. Continuing Agreement. This is a continuing Agreement and shall remain in full force and effect and be binding upon the Borrower and Standby Creditor until payment in full of the Obligations.

SECTION 23. Governing Law; Jurisdiction and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The parties hereto irrevocably submit to the nonexclusive jurisdiction of any Federal or State court sitting in Nassau County or Suffolk County over any suit, action or proceeding arising out of this Agreement.

SECTION 24. Waiver of Jury Trial and Notice of Acceptance. Each of the parties hereto irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the Subordinated Debt. Standby Creditor hereby waives any and all notice of acceptance of this Agreement.

SECTION 25. Counterparts. This Agreement may be executed in any number of counterparts each of which will be an original with the same effect as if the signatures were on the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopier or electronic image scan transmission (such as a “pdf” file) will be effective as delivery of a manually executed counterpart of the Agreement.

SECTION 26. Joint and Several. If this Agreement is executed by two or more persons, each such person shall be jointly and severally liable for the performance of the obligations hereunder.

SECTION 27. Standby Creditor Claims.  Notwithstanding any provision of this Agreement to the contrary, upon the expiration of the Standby Period and provided the representations and warranties in Section 2 remain true and correct, Standby Creditor may make a Claim against Borrower and take all other actions of a subordinate secured creditor with respect to Borrower’s default under the Subordinated Note provided Lender is promptly served with notice of same. If, at any time during the pendency of Standby Creditor’s Claim, Lender has a Claim against any Borrower with respect to the Obligations, Standby Creditor’s Claim (and any other actions taken by Standby Creditor) shall be deemed to be subject and subordinate to Lender’s Claim in all respects. In addition, the subordination of Standby Creditor’s security interests and Claims to those of Lender pursuant to Section 6 above shall remain in full force and effect at all times. If Lender has made a Claim against any Borrower, Standby Creditor shall not accept, and Borrower (or any party on behalf of Borrower) shall not pay any portion of the principal sum or any other amount owed to Standby Creditor under the Subordinated Note (including Permitted Payments) until the Obligations have been indefeasibly paid in full.

[NOTHING FURTHER ON THIS PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the day and year first above written.

STANDBY CREDITORS:

EXHIBIT A

Copy of Subordinated Note

11

Exhibit 10.5

MANAGEMENT SERVICES AGREEMENT

BY AND BETWEEN

1847 WOLO INC.

AND

1847 PARTNERS LLC

Dated as of March __, 2021

MANAGEMENT SERVICES AGREEMENT

MANAGEMENT SERVICES AGREEMENT (as amended, revised, supplemented or otherwise modified from time to time, this “Agreement”), dated as of March __, 2021, by and between 1847 WOLO INC., a Delaware corporation (the “Company”), and 1847 PARTNERS LLC, a Delaware limited liability company (the “Manager”). Each party hereto shall be referred to as, individually, a “Party” and, collectively, the “Parties.”

BACKGROUND

The Board of Directors of the Company has determined that it would be in the best interests of the Company to appoint the Manager to perform the Services (as such term is defined herein) and, therefore, the Company has agreed to appoint the Manager to perform the Services on the terms and subject to the conditions set forth herein. The Manager has agreed to act as Manager and to perform the Services on the terms and subject to the conditions set forth herein.

The Manager also acts as an external manager for 1847 Holdings LLC (the “Parent”), the Company’s parent entity, pursuant to the Management Services Agreement by and between the Manager and the Parent, dated as of April 15, 2013, as amended (the “Parent MSA”). This Agreement is an Offsetting Management Services Agreement as defined and referenced in the Parent MSA.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; any reference to an “Article,” “Section” or an “Exhibit” refers to an Article, Section or an Exhibit, as the case may be, of this Agreement; and the words “herein,” “hereinafter,” “hereof,” “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision:

“Affiliate” means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person or (ii) any officer, director, general member, member or trustee of such Person. For purposes of this definition, the terms “controlling,” “controlled by” or “under common control with” shall mean, with respect to any Persons, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, or the power to elect at least 50% of the directors, managers, general members, or Persons exercising similar authority with respect to such Person.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“Board of Directors” means the Board of Directors of the Company or any committee thereof that has been duly authorized by the Board of Directors to make a decision on the matter in question or bind the Company as to the matter in question.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in the City of New York are required, permitted or authorized, by applicable law or executive order, to be closed for regular banking business.

“Commencement Date” means the date of this Agreement.

“Company” has the meaning set forth in the preamble of this Agreement.

“Company Information” means any information concerning the Company or any of the Subsidiaries of the Company and their respective financial condition, business or operations that (i) relates to earnings, (ii) is competitively sensitive, (iii) relates to trade secrets, (iv) is proprietary or (v) is similar to any of the foregoing information.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Federal Securities Laws” means, collectively, the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder.

“Fiscal Quarter” means each fiscal quarter of the Company for purposes of the Parent’s reporting obligations under the Exchange Act.

“Fiscal Year” means each fiscal year of the Company for purposes of the Parent’s reporting obligations under the Exchange Act.

“GAAP” means generally accepted accounting principles in effect in the United States, consistently applied.

“Gross Income” has the meaning set forth in Section 61(a) of the Internal Revenue Code of 1986, as amended.

“Incur” means, with respect to any Indebtedness or other obligation of a Person, to create, issue, acquire (by conversion, exchange or otherwise), assume, suffer, guarantee or otherwise become liable in respect of such Indebtedness or other obligation.

“Indebtedness” means, with respect to any Person, (i) any liability for borrowed money, or under any reimbursement obligation relating to a letter of credit, (ii) all indebtedness (including bond, note, debenture, purchase money obligation or similar instrument) for the acquisition of any businesses, properties or assets of any kind (other than property, including inventory, and services purchased, trade payables, other expenses accruals and deferred compensation items arising in the Ordinary Course of Business), (iii) all obligations under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (iv) any liabilities of others described in the preceding clauses (i) to (iii) (inclusive) that such Person has guaranteed or for which such Person is otherwise legally obligated, and (without duplication) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) through (iv) above.

“Indemnified Parties” has the meaning set forth in Article IX hereof.

“Losses” has the meaning set forth in Article IX hereof.

“Management Fee” has the meaning set forth in Section 7.1(a) hereof.

“Management Fee Payment Date” means the first Business Day of each Fiscal Quarter or, in the case of the Fiscal Quarter in which this Agreement is terminated, the Termination Date.

“Manager” has the meaning set forth in the preamble of this Agreement.

“Non-Critical Services” means any Services other than the Services for which the Manager was engaged by the Company in light of the experience and expertise of the employees of the Manager.

“Ordinary Course of Business” means, with respect to any Person, an action taken by such Person if such action is (i) consistent with the past practices of such Person and is taken in the normal day-to-day business or operations of such Person and (ii) which is not required to be specifically authorized or approved by the board of directors of such Person.

“Parent” has the meaning set forth in the recitals to this Agreement.

“Parent Management Fee” has the meaning set forth in Section 7.1(a) hereof.

“Parent MSA” has the meaning set forth in the recitals to this Agreement.

“Party” and “Parties” have the meaning set forth in the preamble of this Agreement.

“Person” means any individual, company (whether general or limited), limited liability company, corporation, trust, estate, association, nominee or other entity.

“Securities Act” means the Securities Act of 1933, as amended.

“Services” has the meaning set forth in Section 3.1(b) hereof.

“Subsidiary” means, with respect to any Person, any corporation, company, joint venture, limited liability company, association or other entity in which such Person owns, directly or indirectly, more than 50% of the outstanding voting equity securities or interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such entity.

“Termination Date” means the date upon which this Agreement is terminated pursuant Article VIII hereof.

ARTICLE II

APPOINTMENT OF THE MANAGER

Section 2.1 Appointment

The Company hereby agrees to, and hereby does, appoint the Manager to perform the Services as set forth in Section 3.1 herein and in accordance with the terms and conditions of this Agreement.

Section 2.2 Term

The Manager shall provide Services to the Company from the Commencement Date until the termination of this Agreement in accordance with Article VIII hereof.

ARTICLE III

OBLIGATIONS OF THE PARTIES

Section 3.1 Obligations of the Manager

(a) Subject always to the oversight and supervision of the Board of Directors and the terms and conditions of this Agreement, the Manager shall during the term of this Agreement perform the Services as set forth in Section 3.1(b) below and comply with the operational objectives and business plans of the Company in existence from time to time. The Company shall promptly provide the Manager with all stated operational objectives and business plans of the Company approved by the Board of Directors and any other available information reasonably requested by the Manager.

(b) The Manager agrees and covenants that it shall perform, or cause to be performed, the following services hereunder (as may be modified from time to time pursuant to Section 3.3 hereof, the “Services”):

(i) conduct general and administrative supervision and oversight of the Company’s day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and

(ii) oversee and consult with respect to the Company’s business and operational strategies, the implementation of such strategies and the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions or dispositions and product or service lines.

(c) In connection with the performance of the Services under this Agreement, the Manager shall have all necessary power and authority to perform, or cause to be performed, such Services on behalf of the Company.

(d) In connection with the performance of its obligations under this Agreement, the Manager is not permitted to engage in any activities that would cause it to become an “investment adviser” as defined in Section 202(a)(11) of the Investment Advisers Act of 1940, as amended, or any successor provision thereto.

(e) While the Manager is providing the Services under this Agreement, the Manager shall also be permitted to provide services, including services similar to the Services covered hereby, to other Persons, including Affiliates of the Manager. This Agreement and the Manager’s obligation to provide the Services under this Agreement shall not create an exclusive relationship between the Manager and its Affiliates, on the one hand, and the Company and its Subsidiaries, on the other.

Section 3.2 Obligations of the Company

(a) The Company shall, and the Company shall cause its Subsidiaries to, do all things reasonably necessary on their part as requested by the Manager consistent with the terms of this Agreement to enable the Company to fulfill its obligations under this Agreement.

(b) The Company shall, and the Company shall cause its Subsidiaries to, take reasonable steps to ensure that:

(i) the officers and employees of the Company and its Subsidiaries, as the case may be, act in accordance with the terms of this Agreement and the reasonable directions of the Manager in fulfilling the Manager’s obligations hereunder and allowing the Manager to exercise its powers and rights hereunder; and

(ii) the Company and its Subsidiaries provide to the Manager alt reports (including monthly management reports and all other relevant reports) that the Manager may reasonably require and on such dates as the Manager may reasonably require.

Section 3.3 Change of Services

(a) The Company and the Manager shall have the right at any time during the term of this Agreement to change the Services provided by the Manager and such changes shall in no way otherwise affect the rights or obligations of any Party hereunder.

(b) Any change in the Services shall be authorized in writing and evidenced by an amendment to this Agreement, as provided in Section 12.9 hereof. Unless otherwise agreed in writing, the provisions of this Agreement shall apply to all changes in the Services.

ARTICLE IV

POWERS OF THE MANAGER

Section 4.1 Powers of the Manager

(a) The Manager shall have no power to enter into any contract for or on behalf of the Company or otherwise subject it to any obligation, such power to be the sole right and obligation of the Company, acting through its Board of Directors and/or the Company’s officers.

(b) Subject to Section 4.2 and for purposes other than to delegate its duties and powers to perform the Services hereunder, the Manager shall have the power to engage any agents (including real estate agents and managing agents), valuers, contractors and advisors (including operational, accounting, financial, tax and legal advisors) that it deems necessary or desirable in connection with the performance of its obligations hereunder, which costs therefor shall be subject to reimbursement in accordance with Section 7.2 hereto.

Section 4.2 Delegation

The Manager may delegate or appoint:

(a) Any of its Affiliates as its agent, at its own cost and expense, to perform any or all of the Services hereunder; or

(b) Any Person, whether or not an Affiliate of the Manager, as its agent, at its own cost and expense, to perform those Services hereunder which, in the sole discretion of the Manager, are NonCritical Services; provided, however, that, in each case, the Manager shall not be relieved of any of its obligations or duties owed to the Company hereunder as a result of such delegation. The Manager shall be permitted to share Company Infom1ation with its appointed agents subject to appropriate, reasonable and customary confidentiality arrangements. For the avoidance of doubt, any reference to Manager herein shall include its delegates or appointees pursuant to this Section 4.2.

Section 4.3 Manager’s Obligations, Duties and Powers Exclusive

The Company agrees that during the term of this Agreement, the obligations, duties and powers imposed on and granted to the Manager under Article III and this Article IV are to be performed or held exclusively by the Manager, subject to Section 4.2 hereof, and the Company shall not, either directly or indirectly, through its employees, Board of Directors or any other Person, as the case may be, perfo1m any of the Services except in circumstances where it is necessary to do so to comply with applicable law or as otherwise agreed by the Manager.

ARTICLE V

INSPECTION OF RECORDS

Section 5.1 Books and Records of the Company

At all reasonable times and on reasonable notice, the Manager and any Person authorized by the Manager shall have access to, and the right to inspect, for any reasonable purpose, during the term of this Agreement and for a period of five (5) years after termination hereof, the books, records and data stored in computers and all documentation of the Company pertaining to all Services performed, or to be performed, by the Manager or the Management Fee paid, or to be paid, by the Company to the Manager, in each case, hereunder. There shall be no cost or expense charged by any Party to another Party pursuant to the exercise of any right under this Section 5.1.

Section 5.2 Books and Records of the Manager

At all reasonable times and on reasonable notice, the Company and any Person authorized by the Company shall have access to, and the right to inspect the books, records and data stored in computers and all documentation of the Manager pertaining to all Services performed, or to be performed, by the Manager or the Management Fee paid, or to be paid, by the Company to the Manager, in each case, hereunder. There shall be no cost or expense charged by any Party to another Party pursuant to the exercise of any right under this Section 5.2.

ARTICLE VI

AUTHORITY OF THE COMPANY AND THE MANAGER

Each Party represents and warrants to the other that it is duly authorized with full power and authority to execute, deliver and perform its obligations and duties under this Agreement. The Company represents and warrants that the engagement of the Manager has been duly authorized by the Board of Directors and is in accordance with all governing documents of the Company.

ARTICLE VII

MANAGEMENT FEE; EXPENSES

Section 7.1 Management Fee

(a) Subject to the terms and conditions set forth in this Section 7.1, for the term of this Agreement, as payment to the Manager for performing Services hereunder during any Fiscal Quarter or any part thereof, the Company shall pay a quarterly management fee (the “Management Fee”) to the Manager on each Management Fee Payment Date for such Fiscal Quarter equal to the greater of $75,000 or 2% of Adjusted Net Assets (as defined in the Parent MSA) of the Company; provided, however, that (i) with respect to the Fiscal Quarter in which the Commencement Date occurs, the Management Fee with respect to such Fiscal Quarter or part thereof shall be equal to the product of (x) the Management Fee, multiplied by (y) a fraction, the numerator of which is the number of days from and including the Commencement Date to and including the last day of such Fiscal Quarter and the denominator of which is the number of days in such Fiscal Quarter, (ii) with respect to the Fiscal Quarter in which this Agreement is terminated, the Management Fee with respect to such Fiscal Quarter or part thereof shall be equal to the product of (x) the Management Fee, multiplied by (y) a fraction, the numerator of which is the number of days from and including the first day of such Fiscal Quarter to but excluding the date upon which this Agreement is terminated and the denominator of which is the number of days in such Fiscal Quarter, (iii) if the aggregate amount of Management Fees paid or to be paid by the Company, together with all other management fees paid or to be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to any Fiscal Year exceeds, or is expected to exceed, 9.5% of the Parent’s Gross Income with respect to such Fiscal Year, then the Manager agrees that the Management Fee to be paid by the Company for any remaining Fiscal Quarters in such Fiscal Year shall be reduced, on a pro rata basis determined by reference to the management fees to be paid to the Manager by all of the Subsidiaries of the Parent, until the aggregate amount of the Management Fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to such Fiscal Year, does not exceed 9.5% of the Parent’s Gross Income with respect to such Fiscal Year, and (iv) if the aggregate amount the Management Fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to any Fiscal Quarter exceeds, or is expected to exceed, the aggregate amount of the management fee (before any adjustment thereto) calculated and payable under the Parent MSA (the “Parent Management Fee”) with respect to such Fiscal Quarter, then the Manager agrees that the Management Fee to be paid by the Company for such Fiscal Quarter shall be reduced, on a pro rata basis, until the aggregate amount of the Management Fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to such Fiscal Quarter, does not exceed the Parent Management Fee calculated and payable with respect to such Fiscal Quarter. The Management Fee shall be paid in U.S. dollars by wire transfer in immediately available funds to an account or accounts designated by the Manager from time to time.

(b) If the Company does not have sufficient liquid assets to timely pay the entire amount of the Management Fee due on any Management Fee Payment Date, the Company shall liquidate assets or Incur Indebtedness in order to pay such Management Fee in full on such Management Fee Payment Date; provided, however, that if the Management Fee due on any Management Fee Payment Date cannot be paid by the Company as the result of subordination provisions or other restrictions contained in financing or other agreements between the Company and its senior lenders or the senior lenders of any of its affiliates, then the Management Fee shall accrue and be paid as soon as the Company is able to pay the Management Fee without violation such subordination provision or other restrictions.

Section 7.2 Reimbursement of Expenses

(a) Subject to Section 7.2(b), the Company shall reimburse the Manager for all costs and expenses of the Company, including all out-of-pocket costs and expenses, that are actually Incurred by the Manager or its Affiliates on behalf of the Company in connection with performing Services hereunder, and all costs and expenses the reimbursement of which is specifically approved by the Board of Directors.

(b) Notwithstanding the foregoing or anything else to the contrary herein, neither the Company nor any Subsidiary of the Company shall be obligated or responsible for reimbursing or otherwise paying for any costs or expenses relating to the Manager’s overhead or to the Manager’s conduct or maintenance of its business and operations as a provider of management services.

(c) Any such reimbursement shall be made upon demand by the Manager in U.S. dollars by wire transfer in immediately available funds to an account or accounts designated by the Manager from time to time.

ARTICLE VIII

TERMINATION; RESIGNATION AND REMOVAL OF THE MANAGER

Section 8.1 Resignation by the Manager

The Manager may resign at any time upon sixty (60) days’ prior written notice to the Company, which right shall not be contingent upon the finding of a replacement manager. However, if the Manager resigns, until the date on which the resignation becomes effective, the Manager shall, upon request of the Board of Directors, use reasonable efforts to assist the Board of Directors to find a replacement manager at no cost and expense to the Company.

Section 8.2 Removal of the Manager

The Manager may be removed by the Company at any time upon sixty (60) days’ prior written notice to the Manager, which right shall not be contingent upon the finding of a replacement manager.

Section 8.3 Termination

Subject to Section 12.4, this Agreement shall terminate upon the effective date of the resignation or removal of the Manager in accordance with Section 8.1 or Section 8.2 hereof.

Section 8.4 Directions

After a written notice of termination has been given under this Article VIII, the Company may direct the Manager to undertake any actions necessary to transfer any aspect of the ownership or control of the assets of the Company to the Company or to any nominee of the Company and to do all other things necessary to bring the appointment of the Manager to an end, and the Manager shall comply with all such reasonable directions. 1n addition, the Manager shall, at the Company’s expense, deliver to any new manager or the Company any books or records held by the Manager under this Agreement and shall execute and deliver such instruments and do such things as may reasonably be required to permit new management of the Company to effectively assume its responsibilities.

Section 8.5 Payments Upon Termination

Notwithstanding anything in this Agreement to the contrary, the fees, costs and expenses payable to the Manager pursuant to Article VII hereof shall be payable to the Manager upon, and with respect to, the termination of this Agreement pursuant to this Article VIII. All payments made pursuant to this Section 8.5 shall be made in accordance with Article VII hereof.

ARTICLE IX

INDEMNITY

The Company shall indemnify, reimburse, defend and hold harmless the Manager and its Affiliates and their respective successors and permitted assigns, together with their respective employees, officers, members, managers, directors, agents and representatives (collectively the “Indemnified Parties”), from and against all losses (including lost profits), costs, damages, injuries, taxes, penalties, interests, expenses, obligations, claims and liabilities joint or severable) of any kind or nature whatsoever (collectively “Losses”) that are Incurred by such Indemnified Parties in connection with, relating to or arising out of (i) the breach of any term or condition of this Agreement, or (ii) the performance of any Services hereunder; provided, however, that the Company shall not be obligated to indemnify, reimburse, defend or hold harmless any Indemnified Party for any Losses Incurred, by such Indemnified Party in connection with, relating to or arising out of:

(a) a breach by such Indemnified Party of this Agreement;

(b) the gross negligence, willful misconduct, bad faith or reckless disregard of such Indemnified Party in the performance of any Services hereunder; or

(c) fraudulent or dishonest acts of such Indemnified Party with respect to the Company or any of its Subsidiaries.

The rights of any Indemnified Party referred to above shall be in addition to any rights that such Indemnified Party shall otherwise have at law or in equity.

Without the prior written consent of the Company, no Indemnified Party shall settle, compromise or consent to the entry of any judgment in, or otherwise seek to terminate any, claim, action, proceeding or investigation in respect of which indemnification could be sought hereunder unless (a) such Indemnified Party indemnifies the Company from any liabilities arising out of such claim, action, proceeding or investigation, (b) such settlement, compromise or consent includes an unconditional release of the Company and Indemnified Party from all liability arising out of such claim, action, proceeding or investigation and (c) the parties involved agree that the terms of such settlement, compromise or consent shall remain confidential.

ARTICLE X

LIMITATION OF LIABILITY OF THE MANAGER

Section 10.1 Limitation of Liability

The Manager shall not be liable for, and the Company shall not take, or permit to be taken, any action against the Manager to hold the Manager liable for, any error of judgment or mistake of law or for any loss suffered by the Company or its Subsidiaries (including, without limitation, by reason of the purchase, sale or retention of any security or assets) in connection with the performance of the Manager’s duties under this Agreement, except for a loss resulting from gross negligence, willful misconduct, bad faith or reckless disregard on the part of the Manager in the performance of its duties and obligations under this Agreement, or its fraudulent or dishonest acts with respect to the Company or any of its Subsidiaries.

Section 10.2 Reliance of Manager

The Manager may take and may act and rely upon:

(a) the opinion or advice of legal counsel, which may be in-house counsel to the Company or the Manager, any U.S.-based law firm, or other legal counsel reasonably acceptable to the Board of Directors, in relation to the interpretation of this Agreement or any other document (whether statutory or otherwise) or generally in connection with the Company;

(b) advice, opinions, statements or information from bankers, accountants, auditors,

(c) valuation consultants and other Persons consulted by the Manager who are in each case believed by the Manager in good faith to be expert in relation to the matters upon which they are consulted; and

(d) any other document provided to the Manager in connection with the Company upon which it is reasonable for the Manager to rely.

The Manager shall not be liable for anything done, suffered or omitted by it in good faith in reliance upon such opinion, advice, statement, information or document.

ARTICLE XI

LEGAL ACTIONS

The Manager shall notify the Company promptly of any claim made by any third party in relation to the assets of the Company ai1d shall send to the Company any notice, claim, summons or writ served on the Manager concerning the Company.

The Manager shall not, without the prior written consent of the Board of Directors, purport to accept or admit any claims or liabilities of which it receives notification on behalf of the Company or make any settlement or compromise with any third party in respect of the Company.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Obligation of Good Faith; No Fiduciary Duties

The Manager shall perform its duties under this Agreement in good faith and for the benefit of the Company. The relationship of the Manager to the Company is as an independent contractor and nothing in this Agreement shall be construed to impose on the Manager any express or implied fiduciary duties.

Section 12.2 Binding Effect

This Agreement shall be binding upon, shall inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted assigns.

Section 12.3 Compliance

(a) The Manager shall (and must ensure that each of its officers, agents and employees) comply with any law, including the Federal Securities Laws and the securities laws of any applicable jurisdiction, in each case, as in effect from time to time, to the extent that it concerns the functions of the Manager under this Agreement.

(b) The Manager shall maintain management systems, policies and internal controls and procedures that reasonably ensure that the Manager and its employees comply with the terms and conditions of this Agreement, as well as comply with the internal policies, controls and procedures established by the Company from time to time, including, without limitation, those relating to trading policies, conflicts of interest and similar corporate governance measures.

Section 12.4 Effect of Termination; Survival

This Agreement shall be effective as of the date first above written and shall continue in full force and effect thereafter until termination hereof in accordance with Article VIII. The obligations of the Company set forth in Articles VII, VIII and IX and Sections 10.1, 12.5, 12.7, 12.8, 12.9, 12.17 and 12.20 hereof shall survive such termination of this Agreement, subject to applicable law.

Section 12.5 Notices

Any notice or other communication required or permitted under this Agreement shall be deemed to have been duly given (a) five (5) Business Days following deposit in the mails if sent by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile transmission, if receipt thereof is confirmed by telephone, (c) when delivered, if delivered personally to the intended recipient and (d) two Business Days following deposit with a nationally recognized overnight courier service, in each case addressed as follows:

If to the Company, to:

1847 Wolo Inc.

c/o 1847 Holdings LLC

590 Madison Avenue, 21st Floor

New York, NY 10022

Attn: Jay Amond

Facsimile: 917-793-5950

If to the Manager, to:

c/o The 1847 Companies LLC

590 Madison Avenue, 21^st Floor

New York, NY 10022

Attn: Ellery W. Roberts

Facsimile: 917-793-5950

with a copy (which shall not constitute notice) to:

Bevilacqua PLLC

1050 Connecticut Ave., Suite 500

Washington, DC 20036

Attn: Louis A. Bevilacqua

Email: lou@bevilacquapllc.com

Facsimile: 202-869-0889

or to such other address or facsimile number as any such Party may, from time to time, designate in writing to all other Parties hereto, and any such communication shall be deemed to be given, made or served as of the date so delivered or, in the case of any communication delivered by mail, as of the date so received.

Section 12.6 Headings

The headings in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

Section 12.7 Applicable Law

This Agreement, the legal relations between and among the Parties and the adjudication and the enforcement thereof shall be governed by and interpreted and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions thereof to the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

Section 12.8 Submission to Jurisdiction; Waiver of Jury Trial

Subject to Section 12.20 hereof, each of the Parties hereby irrevocably acknowledges and agrees that any legal action or proceeding brought with respect to any of the obligations arising under or relating to this Agreement shall be brought only in the courts of the State of New York, County of New York or in the United States District Court for the Southern District of New York and each of the Parties hereby irrevocably submits to and accepts with regard to any such action or proceeding, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each Party hereby further irrevocably waives any claim that any such courts lack jurisdiction over such Party, and agrees not to plead or claim, in any legal action or proceeding with respect to this Agreement or the transactions contemplated hereby brought in any of the aforesaid courts, that any such court lacks jurisdiction over such Party. Each Party irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party, at its address for notices set forth in Section 12.5 hereof, such service to become effective ten (10) days after such mailing. Each Party hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other documents contemplated hereby that service of process was in any way invalid or ineffective. The foregoing shall not limit the rights of any Party to serve process in any other manner permitted by applicable law. The foregoing consents to jurisdiction shall not constitute general consents to service of process in the State of New York for any purpose except as provided above and shall not be deemed to confer rights on any Person other than the respective Parties.

Each of the Parties hereby waives any right it may have under the laws of any jurisdiction to commence by publication any legal action or proceeding with respect this Agreement. To the fullest extent permitted by applicable law, each of the Parties hereby irrevocably waives the objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement in any of the courts referred to in this Section 12.8 and hereby further irrevocably waives and agrees not to plead or claim that any such court is not a convenient forum for any such suit, action or proceeding.

The Parties agree that any judgment obtained by any Party or its successors or assigns in any action, suit or proceeding referred to above may, in the discretion of such Party (or its successors or assigns), be enforced in any jurisdiction, to the extent permitted by applicable law.

The Parties agree that the remedy at law for any breach of this Agreement may be inadequate and that should any dispute arise concerning any matter hereunder, this Agreement shall be enforceable in a court of equity by an injunction or a decree of specific performance. Such remedies shall, however, be cumulative and nonexclusive, and shall be in addition to any other remedies which the Parties may have.

Each Party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation as between the Parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each Party (a) certifies that no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other Parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 12.8.

Section 12.9 Amendment; Waivers

No term or condition of this Agreement may be amended, modified or waived without the prior written consent of the Party against whom such amendment, modification or waiver will be enforced.

Any waiver granted hereunder shall be deemed a specific waiver relating only to the specific event giving rise to such waiver and not as a general waiver of any term or condition hereof.

Section 12.10 Remedies to Prevailing Party

If any action at law or equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

Section 12.11 Severability

Each provision of this Agreement is intended to be severable from the others so that if, any provision or term hereof is illegal, invalid or unenforceable for any reason whatsoever, such illegality, invalidity or unenforceability shall not affect or impair the validity of the remaining provisions and terms hereof; provided, however, that the provisions governing payment of the Management Fee described in Article VII hereof are not severable.

Section 12.12 Benefits Only to Parties

Nothing expressed by or mentioned in this Agreement is intended or shall be construed to give any Person, other than the Parties and their respective successors or permitted assigns and the Indemnified Parties, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained, terms Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns, and for the benefit of no other Person.

Section 12.13 Further Assurances

Each Party hereto shall take any and all such actions, and execute and deliver such further agreements, consents, instruments and any other documents as may be necessary from time to time to give effect to the provisions and purposes of this Agreement.

Section 12.14 No Strict Construction

The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by all Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

Section 12.15 Entire Agreement

This Agreement constitutes the sole and entire agreement of the Parties with regards to the subject matter of this Agreement. Any written or oral agreements, statements, promises, negotiations or representations not expressly set fo1ih in this Agreement are of no force and effect.

Section 12.16 Assignment

This Agreement shall not be assignable by either party except by the Manager to any Person with which the Manager may merge or consolidate or to which the Manager transfers substantially all of its assets, and then only in the event that such assignee assumes all of the obligations to the Company and the Subsidiaries of the Company hereunder.

Section 12.17 Confidentiality

(a) The Manager shall not, and the Manager shall cause its Affiliates and their respective agents and representatives not to, at any time from and after the date of this Agreement, directly or indirectly, disclose or use any confidential or proprietary information, including Company Information, involving or relating to (x) the Company, including any information contained in the books and records of the Company and (y) the Subsidiaries of the Company, including any information contained in the books and records of any such Subsidiaries; provided, however, that disclosure and use of any information shall be permitted (i) with the prior written consent of the Company, (ii) as, and to the extent, expressly permitted by this Agreement or any other agreement between the Manager and the Company or any of the Company’s Subsidiaries (but only to the extent that such information relates to such Subsidiaries), (iii) as, and solely to the extent, necessary or required for the performance by the Manager, any of its Affiliates or its delegates, of any of their respective obligations under this Agreement, (iv) as, and to the extent, necessary or required in the operation of the Company’s business or operations in the Ordinary Course of Business, (v) to the extent such information is generally available to, or known by, the public or otherwise has entered the public domain (other than as a result of disclosure in violation of this Section 12.17 by the Manager or any of its Affiliates), (vi) as, and to the extent, necessary or required by any governmental order, applicable law or any governmental authority, subject to Section 12.17(d), and (vii) as, and to the extent, necessary or required or reasonably appropriate in connection with the enforcement of any right or remedy relating to this Agreement or any other agreement between the Manager and the Company or any of the Company’s Subsidiaries.

(b) The Manager shall produce and implement policies and procedures that are reasonably designed to ensure compliance by the Manager’s directors, officers, employees, agents and representatives with the requirements of this Section 12.17.

(c) For the avoidance of doubt, confidential information includes business plans, financial information, operational information, strategic information, legal strategies or legal analysis, formulas, production processes, lists, names, research, marketing, sales information and any other information similar to any of the foregoing or serving a purpose similar to any of the foregoing with respect to the business or operations of the Company or any of its Subsidiaries. However, the Parties are not required to mark or otherwise designate information as “confidential or proprietary information,” “confidential” or “proprietary” in order to receive the benefits of this Section 12.17.

(d) In the event that the Manager is required by governmental order, applicable law or any governmental authority to disclose any confidential information of the Company or any of its Subsidiaries that is subject to the restrictions of this Section 12.17, the Manager shall (i) notify the Company or any of its Subsidiaries in writing as soon as possible, unless it is otherwise affirmatively prohibited by such governmental order, applicable law or such governmental authority from notifying the Company or any such Subsidiaries, as the case may be, (ii) cooperate with the Company or any such Subsidiaries to preserve the confidentiality of such confidential information consistent with the requirements of such governmental order, applicable law or such governmental authority and (iii) use its reasonable best efforts to limit any such disclosure to the minimum disclosure necessary or required to comply with such governmental order, applicable law or such governmental authority, in each case, at the cost and expense of the Company.

(e) Nothing in this Section 12.17 shall prohibit the Manager from keeping or maintaining any copies of any records, documents or other information that may contain information that is otherwise subject to the requirements of this Section 12.17, subject to its compliance with this Section 12.17.

(f) The Manager shall be responsible for any breach or violation of the requirements of this Section 12.17 by any of its agents or representatives.

Section 12.18 Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

Section 12.19 Designation

This Agreement is an “Offsetting Management Services Agreement” as such term is defined and used pursuant to the Parent MSA, and the Management Fee is an “Offsetting Management Fee” as such term is defined and used pursuant to the Parent MSA.

Section 12.20 Dispute Resolution

All disputes arising out of this Agreement or relating to the performance of either Party of its obligations hereunder, which disputes the Parties are unable to resolve directly between themselves, shall be settled by arbitration in New York, New York (unless the Company and the Manager agree upon another location) before three arbitrators in accordance with the rules then in effect of the American Arbitration Association.

* * *

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

[Signature Page to Management Services Agreement]

Exhibit 10.6

MANAGEMENT FEE SUBORDINATION AGREEMENT

This MANAGEMENT FEE SUBORDINATION AGREEMENT (the “Agreement”) dated as of March 30, 2021 is made by 1847 PARTNERS LLC, a Delaware limited liability company, having an office 590 Madison Avenue, 21^st Floor, New York, New York 10022 (the “Management Company”), 1847 WOLO INC., a Delaware corporation, having an office c/o 1847 Holdings LLC, 590 Madison Avenue, 21^st Floor, New York, New York 10022 (the “Borrower”) to and for the benefit of STERLING NATIONAL BANK, a national banking association, having an address at 400 Rella Boulevard, Montebello, New York 10901 (the “Bank”).

W I T N E S S E T H:

WHEREAS, the Borrower, together with Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc., has executed and delivered to the Bank a certain credit agreement dated as of March 30, 2021, as the same may be amended, supplemented, restated, replaced or otherwise modified from time to time (the “Credit Agreement”); and

WHEREAS, the Borrower and the Management Company entered into an arrangement for the Management Company to provide services to the Borrower pursuant to that certain Management Services Agreement dated March 30, 2021 (the “Management Agreement”). Capitalized terms not otherwise defined herein shall have the meaning set forth in the Credit Agreement.

NOW, THEREFORE, the parties do hereby agree as follows:

1. The Borrower and Management Company do hereby agree that any and all present and future debts, liabilities and obligations of the Borrower to the Management Company arising under the Management Agreement (the “Management Liabilities”), shall at all times be subject and subordinate to any and all present and future debts, obligations and liabilities of the Borrower to the Bank, together with any and all present and future interest thereon (all hereinafter collectively referred to as the “Obligations”).

2. So long as any Obligations shall remain outstanding, the Borrower and Management Company agree that:

(a) Borrower may tender, and Management Company may accept, the Management Fee (as defined in the Management Agreement), in accordance with the terms of the Management Agreement, provided that (i) no Default or Event of Default exists under the Credit Agreement, (ii) payment of the Management Fee would not cause a Default or Event of Default under the Credit Agreement, and (iii) the Management Fee does not exceed Seventy Five Thousand and 00/100 ($75,000.00) Dollars per fiscal quarter.

(b) Without the prior written consent of the Bank, no prepayments or other payments shall be made under the Management Agreement without the written consent of the Bank; and

(c) Without the prior written consent of the Bank, no security interest or Lien shall be tendered or granted by the Borrower or accepted or retained by Management Company to secure the Management Liabilities.

3. The Borrower and Management Company agree that they will place proper notations or legends upon their books of account and any evidence of the Management Liabilities, disclosing that the Management Liabilities are subject to the terms of this Agreement.

4. This Agreement shall be a continuing agreement, and shall remain in full force and effect until the indefeasible payment and termination of all Obligations, as determined by the Bank in its sole discretion, and no release, surrender or manner of payment, compromise, or any other act or failure to act by the Bank, shall, in any way, impair the rights of the Bank hereunder and its priority over the Management Liabilities, and the Bank shall not be required to give any notice whatever to the Management Company of any transaction whatsoever between the Borrower and the Bank, all of which are hereby waived.

5. The Borrower and Management Company respectively waive the right to interpose any counterclaims (other than compulsory counterclaims) or setoffs of any nature and description, arising out of or relating to the Management Liabilities or this Agreement. No waiver or modification shall be deemed to be made by the Bank of any of the terms herein, or any of its rights hereunder, unless same shall be in writing and signed by the Bank.

6. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors, legal representatives, and assigns, provided, however, that without the prior written consent of the Bank. Management Company will not assign any part of the Management Liabilities, or any security therefor, or grant any security interest therein, to any person, firm or corporation, other than the Bank.

7. At the request of the Bank, at any time, the Borrower and/or Management Company shall execute and deliver to the Bank any documents, assignments, or other papers which the Bank shall reasonably deem necessary or desirable to effectuate the purposes of this Agreement.

8. This Agreement shall be construed in accordance with the laws of the State of New York.

9. This Agreement may be executed in counterpart copies, each of which shall be deemed an original and all of which shall constitute but a single instrument.

[NO FURTHER TEXT ON THIS PAGE]

SIGNATURE PAGE

Management Fee Subordination Agreement

IN WITNESS WHEREOF, the parties hereto have caused this Management Fee Subordination Agreement to be executed as of the day and year first above written.

3 

Exhibit 10.7

CREDIT AGREEMENT

by and between

Sterling National Bank

and

WOLO MFG. CORP.

WOLO INDUSTRIAL HORN & SIGNAL, INC.

1847 WOLO INC.

dATED: as of MARCH 30, 2021