EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of January 18, 2019, is entered into by and among 1847 GOEDEKER INC. , a Delaware corporation (“ Buyer ”), GOEDEKER TELEVISION CO., INC. , a Missouri corporation (“ Seller ”), and STEVE GOEDEKER and MIKE GOEDEKER (the “ Stockholders ”, and each individually, a “ Stockholder ”).

RECITALS

A. The Seller is engaged in the business of owning and operating a retail appliance and furniture business (the “ Business ”); and

B. Subject to and upon the terms and conditions set forth herein, Seller wishes to sell, assign, transfer, convey and deliver to Buyer, and Buyer desires to purchase, acquire and accept from Seller, free and clear of all liens and liabilities of any kind (other than Assumed Liabilities), all of Seller’s right, title, and interest in and to substantially all of the assets and properties owned by Seller and used in connection with the Business.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1

SALE OF ASSETS AND ASSUMPTION OF LIABLILITIES

1.1 Sale of Assets .

(a) Purchased Assets .

(i) At the Closing (as defined below), Seller shall sell, assign, transfer, convey and deliver to Buyer and Buyer shall accept and purchase all of Seller’s right, title and interest in and to all of the Seller’s assets, properties, rights, interests, claims and goodwill of Seller, tangible and intangible, of every kind and description, as the same shall exist as of the Closing Date, including, without limitation, the assets, properties and rights of the Seller reflected in the Schedule of Purchased Assets attached hereto and labeled Schedule 1.1(a) , together with all assets, properties and rights acquired by Seller of a similar nature since the date of such Schedule, less such assets, properties and rights as may have been disposed of since said date in the ordinary course of business; but specifically excluding the Excluded Assets (the “ Purchased Assets ”).

(ii) The Purchased Assets include, without limitation, all right, title, and interest in and to all of the assets of the Seller, including all of its (a) tangible personal property (such as machinery, equipment, inventories and supplies, furniture, tools, and other mobile equipment), (b) intellectual property, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, (c) leases, subleases, and rights thereunder with respect to both real and personal property, (d) inventory, (e) accounts, notes and other receivables, (f) purchase orders, agreements, contracts, instruments, other similar arrangements, and rights thereunder, (g) securities (other than the Buyer Note), (h) claims, deposits, rebates, discounts earned, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment, (i) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies to the extent such items can be transferred, assigned, conveyed and/or delivered, (j) books, records, ledgers, files, documents, correspondence, lists, catalogs, advertising and promotional materials, studies, reports, customer lists, and other printed or written material, provided, however, that the Purchased Assets shall not include the Excluded Assets.

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(b) Excluded Assets . The foregoing notwithstanding, Buyer shall not purchase, and Seller shall not be deemed to sell, (a) any cash held by the Seller in excess of $1,990,000; (b) the following two automobiles: a 2010 Lexus RX 350 and a 2015 GMC Yukon XL; (b) the consideration paid and to be paid to Seller pursuant to this Agreement; (c) all rights of Seller under this Agreement and this Agreement and the other agreements, instruments and documents deliverable pursuant hereto (the “ Transaction Documents ”); and (d) those other assets which are listed in the Schedule of Excluded Assets attached hereto and labeled Schedule 1.1(b) .

1.2 Assumption of Liabilities .

(a) Assumed Liabilities . As of the Closing Date (as defined below), Buyer shall undertake, assume, and agree to perform, and otherwise pay, satisfy and discharge as of the Closing (a) all accrued expenses and accounts payable, in each case, as set forth on Schedule \* MERGEFORMAT 1.2 \* MERGEFORMAT (a) , and (b) those obligations, duties and liabilities of Seller with respect to the Assumed Contracts (as defined below), in each case only to the extent arising from and after the Closing Date and not arising from or relating to any breach by such Assumed Contracts by Seller prior to the Closing Date (the “ Assumed Liabilities ”). “ Assumed Contracts ” means all of the Contracts (including, without limitation, non-competition agreements by and between any Seller and any employee, consultant or other person and any other engagement letters, contract extensions, rebids, existing proposals, bids, opportunities pursued, purchase orders and any sales contracts in the pipeline) used in conducting or relating to the Business.

(b) Excluded Liabilities . Other than the Assumed Liabilities, all liabilities, liens and other obligations of Seller or any affiliates of Seller relating to the Business or the Purchased Assets arising prior to the Closing Date (collectively, the “ Excluded Liabilities ”), shall remain the sole responsibility of and shall be retained, fully paid, fully performed and fully discharged solely by the Seller. Excluded Liabilities shall include, without limitation: any debts, liabilities or obligations not specifically listed in Schedule 1.2(a) hereof, including (i) any liability of the Seller for income, transfer, sales, use, and all other taxes arising in connection with the consummation of the transactions contemplated hereby (including any income taxes arising because the Seller is transferring the Purchased Assets), whether imposed on Seller as a matter of law, under this Agreement or otherwise, (ii) any liability of the Seller for taxes, including taxes of any person other than the Seller, (iii) any liability of Seller with respect to any indebtedness for borrowed money, (iv) any liability of Seller arising out of any threatened or pending litigation or other claim, (v) any liability, whether arising by operation of law, contract, past custom or otherwise, for unemployment compensation benefits, pension benefits, salaries, wages, bonuses, incentive compensation, sick leave, severance or termination pay, vacation and other forms of compensation or any other form of employee benefit plan (including the health benefits payable reflected on the Seller’s balance sheet), agreement (including employment agreements), arrangement or commitment payable to or for the benefit of any current or former officers, directors and other employees and independent contractors of Seller, (vi) any liabilities of any Seller to the Stockholders or any affiliates or current or former stockholders, members or other equity owners of any Seller, (vii) any liability for costs and expenses of the Seller in connection with this Agreement or any transactions contemplated hereby, (viii) any negative cash or book balances or any intercompany debt by and between, or by and among, Seller and any affiliate of Seller and (ix) any environmental liability. All Excluded Liabilities shall be the responsibility of Seller, and Seller and the Stockholder agree to indemnify and hold the Buyer harmless against any Excluded Liabilities, debts, obligations, claims or damages therefrom, costs and expenses.

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1.3 Closing . The consummation of the transactions contemplated by this Agreement (collectively, the “ Closing ”) will take place through the exchange of signature pages through electronic mail or otherwise on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself), or such other date and time as the Parties may mutually determine. The date and time of the Closing are referred to as the “ Closing Date ”.

1.4 Purchase Price .

(a) In consideration for the sale, assignment and delivery of the Purchased Assets, Buyer shall (i) pay an aggregate purchase price equal to Six Million, Two Hundred Thousand Dollars ($6,200,000) (the “ Purchase Price ”), as the same may be adjusted pursuant to this Agreement, payable in accordance with this Section 1.4 (b) on the Closing Date, (ii) assume the Assumed Liabilities and (iii) issue to Steve Goedeker and Michael Goedeker shares of the Common Stock of the Buyer equal to 11.25% each of all of the issued and outstanding Common Stock of the Buyer as of the Closing Date (the “ Buyer Shares ”).

(b) The Purchase Price for the Purchased Assets shall by payable as follows:

(i) $1,500,000 in cash (the “ Cash Portion ”);

(ii) Promissory Note, in the principal amount of $4,100,000, in substantially the form attached hereto as Exhibit A (the “ Buyer Note ”); and

(iii) Up to $600,000 in Earn Out Payments in accordance with Section  1.6 .

1.5 Purchase Price Adjustments .

(a) Adjustment for Outstanding Indebtedness . The Cash Portion shall be decreased by the amount of any outstanding indebtedness of the Seller or the Business for borrowed money existing as of the Closing Date (other than any indebtedness constituting an Assumed Liability) and the deducted amount shall be utilized to pay off such outstanding indebtedness.

(b) Working Capital Adjustment .

(i) The Purchase Price shall be adjusted to reflect a normal level of cash and Working Capital (as defined below) as outlined in this Section 1.5(b) . “ Working Capital ” is defined as the sum of (x) rebates receivable, plus inventory, plus prepaid expenses less the sum of (y) accounts payable plus payroll related liabilities plus customer deposits plus accrued expenses plus any other current liabilities. The target working capital (“ Target Working Capital ”) shall equal -$1,802,000 (negative amount). The “ Net Working Capital Adjustment ” is the difference between the Closing Date Working Capital (as defined below) less the Target Working Capital.

(ii) Not later than five (5) business days, prior to the Closing Date, the Seller shall prepare and deliver to Buyer a good faith calculation and estimate (the “ Preliminary Closing Statement ”) of (i) the Net Working Capital Adjustment, (ii) the cash of the Business at Closing (“ Closing Cash ”), (iii) and the amount of Closing Cash that is in excess of $1,990,000 (the “ Excess Closing Cash ”) and (iv) the Seller’s calculation of the Purchase Price. The Preliminary Closing Statement, and each element of the Preliminary Closing Statement, shall be prepared in accordance with the Company’s standard accounting practices and be accompanied by reasonable supporting detail. The Purchase Price and the Excess Closing Cash set forth on the Preliminary Closing Statement finally delivered pursuant to this Section 1.5(b) are referred to herein as the “ Estimated Purchase Price ” and the “ Estimated Excess Closing Cash ,” respectively.

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(iii) To the extent that the Net Working Capital Adjustment set forth on the Preliminary Closing Statement finally delivered pursuant to this Section 1.5(b) is a positive number, the Cash Purchase Price shall be increased on a dollar for dollar basis. To the extent that the Net Working Capital Adjustment set forth on the Preliminary Closing Statement finally delivered pursuant to this Section 1.5(b) is a negative number, the Cash Purchase Price shall be decreased on a dollar for dollar basis (such Cash Purchase Price as adjusted and set forth on the Preliminary Closing Statement finally delivered pursuant to this Section 1.5(b) is referred to herein as the “ Estimated Cash Purchase Price .”)

(iv) At the Closing, (A) Excess Closing Cash shall be retained by the Seller and (B) Buyer shall (1) pay, or shall cause to be paid, the Estimated Cash Purchase Price to Seller in cash by wire transfer of immediately available funds to one or more accounts as designated by Seller by written notice to Buyer not less than two (2) Business Days prior to the Closing Date; and (2) deliver the Buyer Note to Seller.

(c) Determination of Final Purchase Price .

(i) Within ninety (90) days after the Closing Date, Buyer shall deliver to Seller a proposed good faith calculation (the “ Closing Statement ”) of: (A) the Net Working Capital Adjustment (the “ Closing Date Net Working Capital Adjustment ”), (B) the Closing Cash (the “ Closing Date Cash ”), (C) Excess Closing Cash (the “ Excess Closing Cash Calculation ”), and (D) Buyer’s calculation of the Purchase Price (the “ Purchase Price Calculation ”). The Closing Statement, and each element thereof, shall be calculated in accordance with the Company’s standard accounting practices and be accompanied by reasonable supporting detail.

(ii) During the thirty (30) days immediately following Seller’s receipt of the Closing Statement (the “ Review Period ”), Seller shall have reasonable access, during normal business hours upon reasonable notice, and in a manner so as to not interfere with the normal business operations of Seller or Buyer or any of their Affiliates, to the working papers used in connection with Buyer’s preparation of the Closing Statement. Seller may, on or prior to the last day of the Review Period, give written notice of any disagreement with Buyer’s proposed Purchase Price Calculation or the Excess Closing Cash Calculation (a “ Notice of Disagreement ”) to Buyer. Any Notice of Disagreement shall specify in reasonable detail the nature and amount of each disagreement so asserted as well as the reasonable basis thereof along with relevant supporting documentation and calculations (the “ Disputed Items ”). Unless Seller provides a Notice of Disagreement on or prior to the last day of the Review Period, (A) the Closing Date Net Working Capital Adjustment shall be deemed to set forth the final Net Working Capital Adjustment, (B) the Closing Date Cash shall be deemed to set forth the final Closing Cash, (C) the Excess Closing Cash Calculation shall be deemed to set for the final Excess Closing Cash and (D) the Purchase Price Calculation shall be deemed to set forth the final Purchase Price. If a timely Notice of Disagreement is received by Buyer, then the Closing Statement (as revised as contemplated in clause (x) or (y) below) shall become final and binding upon the parties on the earlier of (x) the date Buyer and Seller resolve in writing any differences they have with respect to any matter specified in the Notice of Disagreement or (y) the date any matters properly in dispute are finally resolved in writing by the Independent Auditor (as defined below); provided , that, for purposes of clarity, any items that are not so disputed on the Notice of Disagreement shall become final and binding upon the parties on the last day of the Review Period. During the thirty (30) days immediately following the delivery of a Notice of Disagreement, Buyer and Seller shall seek in good faith to resolve in writing any differences which they may have with respect to any Disputed Item. If, at the end of such thirty (30) day period, any Disputed Item specified in the Notice of Disagreement has not been resolved by Seller and Buyer, Seller and Buyer shall submit such Disputed Items to a mutually agreeable independent accounting firm (the “ Independent Auditor ”) for review and resolution of any such Disputed Items which remain in dispute (including such party’s proposed resolution thereof) and which were properly included in the Notice of Disagreement. The terms of appointment and engagement of the Independent Auditor shall be as agreed upon between Seller and Buyer (it being understood that the Independent Auditor shall consider only those Disputed Items as to which there is disagreement as set forth in the Notice of Disagreement and that the Independent Auditor shall be functioning as an expert and not as an arbitrator). The Independent Auditor shall be required to render a determination of the applicable dispute within thirty (30) days after referral of the Disputed Items to the Independent Auditor, which determination must be in writing and must set forth, in reasonable detail, the basis therefor. In making its determination regarding such applicable dispute, the Independent Auditor shall select, with respect to each item in dispute, an amount between Buyer’s position as set forth in the Closing Statement and Seller’s position as set forth in the Notice of Disagreement or equal to either such amount. In connection with the resolution of any dispute, the parties shall provide the Independent Auditor with access to all documents and work papers necessary to make its determination.

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(iii) The fees and disbursements of the Independent Auditor shall be borne by (A) Buyer in the proportion that the aggregate dollar value of the Disputed Items submitted to the Independent Auditor that are unsuccessfully disputed by Buyer bears to the aggregate value of all such items so disputed and (B) by Seller in the proportion that the aggregate dollar value of the Disputed Items submitted to the Independent Auditor that are unsuccessfully disputed by Seller bears to the aggregate value of all such items so submitted. The determination as to each Disputed Item as determined by agreement of Buyer and Seller or by the Independent Auditor shall be final and binding on the parties hereto. The Purchase Price and Excess Closing Cash as finally determined pursuant to clauses (i) and (ii) this Section 1.5(c) shall be referred to herein as the “ Final Purchase Price ” and the “ Final Excess Closing Cash ,” respectively.

(d) Adjustments to Estimated Purchase Price and Estimated Excess Closing Cash .

(i) To the extent that (A) the Final Purchase Price (as defined below) is greater than the Estimated Purchase Price (the amount of such excess, the “ Purchase Price Overage ”), and/or (B) the Final Excess Closing Cash is greater than the Estimated Excess Closing Cash (the amount of such excess, the “ Excess Closing Cash Overage ”), Buyer shall pay Seller an amount equal to the Purchase Price Overage and/or the Excess Closing Cash Overage, as applicable, within five (5) Business Days of the final determination of such amounts.

(ii) To the extent that (A) the Final Purchase Price is less than the Estimated Purchase Price (such amount, the “ Purchase Price Shortfall ”), and/or (B) the Final Excess Closing Cash is less than Estimated Excess Closing Cash (such amount, the “ Excess Closing Cash Shortfall ”), Seller shall pay, within five (5) Business Days, to Buyer, in cash by wire transfer of immediately available funds to one or more accounts designated in writing by Buyer, an amount equal to the Purchase Price Shortfall and/or the Excess Closing Cash Overage, as applicable.

1.6 Earn Out .

(a) Seller shall be entitled to receive the following payments (each, an “ Earn Out Payment ”) to the extent the Business achieves the applicable EBITDA (as defined below) targets:

(i) An Earn Out Payment of Two Hundred Thousand Dollars ($200,000), if the EBITDA of the Business for the trailing twelve (12) month period from the Closing Date (the “ Initial Earn Out Period ”) is $2,500,000 or greater;

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(ii) An Earn Out Payment of Two Hundred Thousand Dollars ($200,000), if the EBITDA of the Business for the trailing twelve (12) month period from the first anniversary of Closing Date (the “ Second Earn Out Period ”) is $2,500,000 or greater; and

(iii) An Earn Out Payment of Two Hundred Thousand Dollars ($200,000), if the EBITDA of the Business for the trailing twelve (12) month period from the second anniversary of the Closing Date (the “ Final Earn Out Period ” and together with the Initial Earn Out Period and the Second Earn Out Period, the “ Earn Out Periods ” and each, an “ Earn Out Period ”) is $2,500,000 or greater.

(b) Within ninety (90) days following the end of each Earn Out Period, Buyer shall prepare and deliver to Seller a statement of the EBITDA of the Business for such Earn Out Period (the “ Earn Out Statement ”). Seller shall have thirty (30) days after receipt of the Earn Out Statement (the “ Earn Out Review Period ”) to review the calculation of EBITDA for such Earn Out Period. During the Review Period, Seller shall have the right to inspect Buyer’s books and records during normal business hours at Buyer's offices, upon reasonable prior notice and solely for purposes reasonably related to the determinations of EBITDA and the resulting Earn Out Payment. Prior to the expiration of the Review Period, Seller may object to the EBITDA calculation set forth on the Earn Out Statement by delivering a written notice of objection (an “ Objection Notice ”) to Buyer, which shall specify the disputed items and shall describe in reasonable detail the basis for such objection, as well as the amount in dispute. If Seller fails to deliver an Objection Notice to Buyer prior to the expiration of the Review Period, then the EBITDA calculation set forth in the Earn Out Statement shall be final and binding on the parties hereto. If Seller timely delivers an Objection Notice, the parties shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the EBITDA and the Earn Out Payment for the applicable Earn Out Period. If the parties are unable to reach agreement within thirty (30) days, then the Parties shall forthwith refer the dispute to a nationally recognized accounting firm mutually agreeable to the Seller and the Buyer for resolution, with the understanding that such firm shall resolve all disputed items within 20 days after such disputed items are referred to it. If the Buyer and the Seller are unable to agree on the choice of an accounting firm, they shall select a nationally recognized accounting firm by lot (after excluding their respective regular outside accounting firms). Each of the Seller, 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 shall be deemed final and conclusive and shall be binding upon the Seller and the Buyer.

(c) To the extent the EBITDA of the Business, as finally determined pursuant to Section 1.6(b) for any applicable Earn Out Period is less than $2,500,000 but greater than $1,500,000, Buyer shall pay a partial Earn Out Payment to Seller in an amount equal to the product determined by multiplying (i) the EBITDA Achievement Percentage by (ii) the applicable Earn Out Payment for such Earn Out Period, where the “ Achievement Percentage ” is the percentage determined by dividing (A) the amount of (i) the EBITDA of the Business for the applicable Earn Out Period less (ii) $1,500,000, by (B) $1,000,000. For avoidance of doubt, no partial Earn Out Payments shall be earned or paid to the extent the EBITDA of the Business for any applicable Earn Out Period is equal or less than $1,500,000. For illustration purposes only, if the EBITDA for the Initial Earn Out Period is $2,000,000, then the Earn Out Payment for the Initial Earn Out Period accrued to Seller under this Agreement shall be equal to $100,000 (i.e. 50% of $200,000), exclusive of interest.

(d) To the extent Seller is entitled to all or a portion of an Earn Out Payment in accordance with this Section 1.6 , the applicable Earn Out Payment(s) (or portion thereof) shall be paid on the date that is three (3) years from the Closing Date (the “ Earn Out Payment Date ”), and shall accrue interest from the date on which it is determined Seller is entitled to such Earn Out Payment (or portion thereof) at a rate equal to five percent (5%) per annum, computed on the basis of a 360 day year for the actual number of days elapsed. Any accrued interest on any Earn Out Payments(s) shall be accrued and paid on the Earn Out Payment Date. Notwithstanding anything to the contrary herein, Buyer shall only make payments to Seller under this Section 1.6(b) in accordance with and as permitted by the terms of the Subordination Agreement.

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(e) For purposes of this Agreement, “ EBITDA ” shall mean the earnings before interest, income taxes, depreciation and amortization of the Business, for the applicable fiscal period ended, determined in accordance with GAAP. For purposes of calculating the Earn-Out Payment, the Management Fee described in Section 4.8 shall be added back to increase earnings and not be treated as an expense of the Buyer.

(f) During the Earn Out Period, the Buyer shall (i) operate the Business in the ordinary course of business substantially consistent with past practices, (ii) operate the Business as a distinct business entity or division so that its results can be verified for purposes of calculating the Earn Out Payment, and (iii) adequately fund the Business during the Earn Out Period. Furthermore, Buyer shall not, directly or indirectly, take any actions in bad faith that would have the purpose of avoiding the Earn Out Payment hereunder. The Seller shall promptly notify the Buyer in writing if the Seller believes that the Buyer is in breach of this Section 1.6 (f) and shall include in such notice the specific Buyer actions that Seller believes result in the alleged breach. Upon receipt of such notice, the Seller and the Buyer shall diligently work in good faith to resolve the breach which resolution may include an amendment to this Section 1.6 .

1.7 Treatment of Payments Under Section 1.5 and Section 1.6 . For the avoidance of doubt, all payments and adjustments made under Section 1.5 and Section 1.6 shall constitute an adjustment to Purchase Price.

1.8 Allocation of Purchase Price . The Purchase Price for the Purchased Assets shall be allocated as determined by the mutual agreement of the Buyer and the Seller. The Parties shall provide such information as any of them shall reasonably request. The Parties shall (i) prepare each report relating to the federal, state and local and other tax consequences of the purchase and sale contemplated hereby (including the filing of Internal Revenue Service Form 8594) in a manner consistent herewith and (ii) not take any position in any tax filing, return, proceeding, audit or otherwise which is inconsistent with the position of the other parties unless permitted to do so by law.

1.9 Further Cooperation . From time to time after the Closing, Seller and Stockholders at Buyer's reasonable request and without further consideration, agree to execute and deliver or to cause to be executed and delivered such other instruments of transfer as Buyer may reasonably request that are necessary to transfer to Buyer more effectively the right, title and interest in or to the Purchased Assets and to take or cause to be taken such further or other action as may reasonably be necessary or appropriate in order to effectuate the transactions contemplated by this Agreement. Neither the Seller nor the Stockholders shall incur any expense in connection with their respective further cooperation pursuant to this Section 1.9 .

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties of Seller and Stockholders . The Seller and the Stockholders jointly and severally represent and warrant to, and agree with, the Buyer as of the date hereof as follows, except as set forth in the Disclosure Schedules to be delivered pursuant to Section 3.3 of this Agreement. The Disclosure Schedules will be arranged for purposes of convenience only, in sections corresponding to the Subsections of this Section 2.1 and will provide exceptions to the representations and warranties contained in Section 2.1 whether or not a specific reference to such Disclosure Schedules are included in a representation and warranty contained in this Section 2.1 .

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(a) Organization; No Subsidiaries; Ownership of Seller . The Seller is a corporation duly-organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. The Seller does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. The Seller is not a participant in any joint venture, partnership or similar arrangement. Except for the Stockholders, no other person owns any right, title or interest in or to any capital stock or other equity interest or owns any security that is exercisable or exchangeable for or convertible into any equity interest in the Seller.

(b) Binding Obligation . The Seller has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby. The Board of Directors of the Seller has duly-authorized the execution and delivery of this Agreement and the other transactions contemplated hereby and, no other corporate proceedings on the part of the Seller are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly-executed and delivered by the Seller and constitutes a valid and binding obligation of the Seller enforceable in accordance with its terms. The execution, delivery and performance by the Seller of this Agreement does not and will not conflict with, or result in any violation of or default under, any provision of the Articles of Incorporation, Bylaws or other constituent instruments of the Seller or any ordinance, rule, regulation, judgment, order, decree, agreement, instrument or license applicable to the Seller or to any of their respective properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to the Seller in connection with its execution, delivery or performance of this Agreement.

(c) Purchased Assets . Except for assets disposed of in the ordinary course of business and Excluded Assets, the Purchased Assets consist of all assets which have been used by the Seller in the Business prior to the date hereof. The Purchased Assets are sufficient for the continued conduct of the Business immediately after the Closing in substantially the same manner as conducted immediately prior to the Closing.

(d) Title to Personal Property; Inventory . Except for assets disposed of, or to be disposed of in the ordinary course of business, the Seller has good and marketable title or a valid leasehold interest in all of the personal property included in the Purchased Assets, in each case free and clear of all mortgages, liens, security interests, pledges, charges or encumbrances of any nature whatsoever. All inventory, finished goods, raw materials, work in progress, supplies, and other inventories of the Business (“ Inventory ”), consists of a quality and quantity usable and salable in the ordinary course of business, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All Inventory is owned by the Seller free and clear of all liens and no Inventory is held on a consignment basis. The quantities of each item of Inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Business.

(e) Real Property .

(i) Seller does not own any real property.

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(ii) Schedule 2.1(e)(ii) sets forth the address of each Leased Real Property (as defined below) and a true, complete and correct list of all leases, subleases and other occupancy agreements (written and oral), including all amendments, extensions, guaranties and other modifications pursuant to which Seller holds any Leased Real Property (the “ Real Property Leases ”), including the date and the names of the parties to such Real Property Leases. Seller has previously delivered to Buyer true, complete and correct copies of all the Real Property Leases and, in the case of an oral Real Property Lease, a written summary of the material terms thereof. Seller has good and valid leasehold interest in and to all of the Leased Real Property, subject to no liens except for Permitted Liens (as defined below). With respect to each Real Property Lease: (i) no security deposit or portion thereof deposited with respect to such Real Property Lease has been applied in respect of a breach or default under such Real Property Lease which has not been redeposited in full; (ii) Seller does not owe or will owe in the future, any brokerage commissions or finder’s fees with respect to such Real Property Lease; (iii) Seller has not subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof; and (iv) there are no liens on the estate or interest created by such Real Property Lease and Seller has not collaterally assigned or granted any other security interest in such Real Property Lease. For purposes of this Agreement, “ Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by Seller including the right to all security deposits and other amounts and instruments deposited by or on behalf of Seller; and “ Permitted Liens ” means (a) landlord’s, mechanic’s, carrier’s, workmen’s, repairmen’s or other similar statutory liens arising or incurred in the ordinary course of business for amounts which are not due and payable and which shall be paid in full and released at Closing, (b) liens for taxes or assessments and similar charges, which either are not delinquent or not yet due and payable and for which adequate reserves have been established in accordance with GAAP, (c) zoning, building and other land use regulations imposed by governmental authorities having jurisdiction over the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property or the operation of the Business thereon, and (d) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the Leased Real Property which do not materially impair the occupancy or use of the Leased Real Property by Seller for the purposes for which it is currently used in connection with the Business.

(f) Contracts . Except as set forth in Schedule 2.1(f) and the lease relating to the Seller’s place of business, the Seller is not a party to or bound by any lease, agreement, contract or other commitment which involves the payment or receipt of more than $10,000 per year or that is not cancelable by the Seller on less than 60 days’ notice (collectively, the “ Contracts ”). Each contract is a valid and binding obligation of the Seller and is in full force and effect. The Seller has performed all material obligations required to be performed by it to date under the Contracts. All Contracts are in the name of the Seller, and all Contracts included in the Assumed Liabilities will be effectively transferred to the Buyer at the time of the Closing. Schedule 2.1 (f) lists all Contracts included in the Purchased Assets.

(g) Litigation . There are no lawsuits, claims, proceedings or investigations pending or, to the best knowledge of the Seller or the Stockholders, threatened by or against or affecting the Seller or any of its respective properties, assets, operations or business which could adversely affect the transactions contemplated by this Agreement or Buyer’s right to utilize the Purchased Assets.

(h) Absence of Changes or Events . Since December 31, 2018, the Business of the Seller has been operated in the ordinary course and there has not been any material adverse change in the financial condition, results of operations, business, assets or prospects of the Seller or the value or condition of the Purchased Assets.

(i) Compliance with Laws . The Seller is not in violation with respect to its operation of the Purchased Assets of any law, order, ordinance, rule or regulation of any governmental authority, except for any violation that would not have a material adverse effect on the Business or its prospects.

(j) Employee Benefit Plans . There are no plans of the Seller in effect for pension, profit sharing, deferred compensation, severance pay, bonuses, stock options, stock purchases, or any other form of retirement or deferred benefit, or for any health, accident or other welfare plan, as to which the Buyer will become liable as a result of the transactions contemplated hereby.

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(k) Environmental Matters . There have been no private or governmental claims, citations, complaints, notices of violation or letters made, issued to or threatened against the Seller by any governmental entity or private or other party for the impairment or diminution of, or damage, injury or other adverse effects to, the environment or public health resulting, in whole or in part, from the ownership, use or operation of any of the Seller’s facilities (whether owned or leased) which will be occupied or operated by Buyer as a result of the transactions contemplated hereby (the “ Property ”). The Seller has duly-complied with, and, to the best of Seller’s and Stockholders’s knowledge, the Property is in compliance with, the provisions of all federal, state and local environmental, health and safety laws, codes and ordinances and all rules and regulations promulgated thereunder. The Seller has provided Buyer with true, accurate and complete copies of any written information in the possession of the Seller which pertains to the environmental history of the Property.

(l) Financial Statements . Attached hereto as Schedule 2.1(l) are true, complete and correct copies of the unaudited balance sheet and statement of income for Seller for the years ended December 31, 2017 and 2018 (the balance sheet as of December 31, 2018 being the “ Most Recent Balance Sheet ” and the date of such balance sheet being the “ Most Recent Balance Sheet Date ”) (such balance sheets and statements being referred to collectively as the “ Financial Statements ”). Each of the Financial Statements (including the notes thereto, if any) are true, complete and correct, have been prepared from, and are consistent with, the books and records of Seller (which are correct and complete in all material respects), and present the financial condition of the Seller in accordance with the Seller’s historical practices as of the dates thereof and the operating results and cash flows for the periods of Seller then ended. Seller does not have any indebtedness for borrowed money pertaining to the Business except for indebtedness that will be paid off at Closing in accordance with Section 1.5 .

(m) Absence of Undisclosed Liabilities . Seller does not have any liability or obligation, other than (a) liabilities set forth on the liabilities side of the Most Recent Balance Sheet, (b) liabilities and obligations which have arisen after the Most Recent Balance Sheet Date in the ordinary course of business or (c) liabilities or obligations which are not material to Seller, the Business or the Purchased Assets.

(n) Taxes . Seller has timely filed all tax returns that it was required to file with the appropriate governmental authorities in all jurisdictions in which such returns are required to be filed. All such tax returns accurately and correctly reflect the taxes of Seller for the periods covered thereby and are complete in all material respects. All taxes owed by Seller, or for which Seller may be liable (whether or not shown on any tax return), have been or will be timely paid. Seller is not currently the beneficiary of any extension of time within which to file any tax return. No claim has ever been made by an authority in a jurisdiction where Seller does not file tax returns that Seller is or may be subject to taxation by that jurisdiction. There are no liens on any of the Purchased Assets or assets of Seller that arose in connection with any failure (or alleged failure) to pay any tax.

(o) Investment . The Seller and the Stockholders (i) understand that the Buyer Shares and the Buyer Note have not been, and will not be, registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (ii) are acquiring the Buyer Shares and the Buyer Note solely for their own accounts for investment purposes, and not with a view to the distribution thereof (except distribution by the Seller to the Stockholders), (iii) are sophisticated investors with knowledge and experience in business and financial matters, (iv) have received certain information concerning the Buyer and have had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Buyer Shares and the Buyer Note, (v) are able to bear the economic risk and lack of liquidity inherent in holding the Buyer Shares and the Buyer Note, and (vi) are Accredited Investors, as defined in the rules and regulations promulgated under the Securities Act.

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(p) Intellectual Property Rights . Except as set forth on Schedule 2.1(p) , neither the Seller nor the Stockholders have any patents, trademarks, copyrights or other material intellectual property rights that are used in the Business.

(q) Brokerage . Except as set forth on Schedule 2.1(q) , there are and will be no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which Seller is a party or to which the Business or the Purchased Assets are subject for which Seller or Buyer could become obligated after the Closing.

(r) Labor Matters .

(i) Schedule 2.1(r) sets forth a true, complete and correct list of (i) all employees and contractors of Seller (collectively, the “ Employees ”) with the name of the employing company of each and the country and state in which the employee normally works, (ii) the position, date of hire, current annual rate of compensation (or with respect to employees compensated on an hourly or per diem basis, the hourly or per diem rate of compensation), including any bonus, contingent or deferred compensation, and estimated or target annual incentive compensation of each such person, (iii) the exempt or non-exempt classification of such person on the Fair Labor Standards Act and any other applicable law regarding the payment of wages; and (iv) the total compensation for each executive and key employee during the fiscal year ending December 31, 2018, including any bonus, contingent or deferred compensation. Current and complete copies of all employment contracts or, where oral, written summaries of the terms thereof, have been delivered or made available to Buyer.

(ii) Seller and any affiliate of Seller (to the extent related to the Business) have not been a party to or otherwise bound by any collective bargaining agreement or relationship with any labor union, works council, trade association, or other such employee representative, have not committed any material unfair labor practice and have not, within the past three years, implemented any plant closing or layoff of employees that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state, provincial or local plant closing or mass layoff Law (collectively, the “ WARN Act ”).

(s) Affiliate Transactions .

(i) Except as set forth on Schedule 2.1(s) , no employee, officer, director, stockholder or Stockholder of Seller or affiliate of Seller, or any person in the immediate family group of any of the foregoing (each, a “ Seller Affiliate ”) (i) is a party to any agreement, contract, commitment, arrangement, or transaction with Seller or that pertains to the business of Seller other than any employment, non-competition, confidentiality or other similar agreements between Seller and any person who is an officer, director or employee of Seller (each, an “ Affiliate Agreement ”); or (ii) owns, leases, or has any economic or other interest in any asset, tangible or intangible (including Intellectual Property Rights), that is used in, held for use in, or necessary for the operation of the business of Seller as currently conducted and as currently proposed to be conducted (together with the Affiliate Agreements, collectively the “ Affiliate Transactions ”).

(ii) As of the Closing, there will be no outstanding or unsatisfied obligations of any kind (including inter-company accounts, notes, guarantees, loans, or advances) between Seller, on the one hand, and a Seller Affiliate on the other hand, except to the extent arising out of the post-Closing performance of an Affiliate Agreement that is in writing and is set forth on Schedule 2.1(s) (and a true, complete and correct copy of which has been provided to Buyer).

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(t) Customers, Distributors and Vendors . Schedule 2.1(t) sets forth a complete and accurate list of: (a) the twenty (20) largest customers of the Business (measured by the aggregate amount purchased by the customer) during the 12-month period ended December 31, 2018 (each a “ Material Customer ”, and collectively, the “ Material Customers ”), showing the approximate total sales to each such customer during such 12-month period and the percentage of the total sales represented by such sales, and (b) the twenty (20) largest vendors of the Business (measured by the aggregate amount purchased by the Seller) during the 12-month period ended December 31, 2018 (each a “ Material Vendor ”, and collectively, the “ Material Vendors ”), showing the approximate total spend by Seller from each such vendor during such 12-month period and the percentage of total spend of Seller represented by such spend. (i) No such Material Customer or Material Vendor within the last twelve (12) months has canceled or otherwise terminated, or threatened to cancel, or to the knowledge of Seller or the Stockholders, intends to cancel or terminate, its relationship with Seller, (ii) no such Material Customer during the twelve (12) months has decreased materially or threatened to decrease or limit materially its business with Seller, or to the knowledge of Seller or the Stockholders, intends to modify materially its relationship with Seller (including changing the terms, whether related to payment, price or otherwise) and (iii) no such Material Vendor during the twelve (12) months has increased or threatened to increase the prices charged by such distributor or vendor to Seller for the goods or services provided by such vendor to Seller. The relationship of Seller with each Material Customer and Material Vendor is, to the knowledge of Seller and the Stockholders, satisfactory and there are no unresolved material disputes with any such Material Customer or Material Vendor.

(u) Accounts Receivable; Inventory .

(i) All accounts and notes receivable reflected on the Most Recent Balance Sheet are bona fide receivables arising in the ordinary course of business and the Sellers have no actual knowledge that any such accounts receivable are not collectible. Except as set forth on Schedule 2.1(u) , there are no liens (other than Permitted Liens) on such receivables or any part thereof and no agreement for deduction, free goods, discount or other deferred price or quantity adjustment has been made with respect to any such receivables by Seller.

(v) The inventory of Seller consists of raw materials, manufactured and purchased parts and finished goods saleable or usable in the ordinary course of business. The inventory of Seller is fit and sufficient for the purposes for which it was provided or manufactured and is normal and reasonable in kind and amount in light of the normal needs of the Business as presently conducted.

(w) Warranty Claims . Except as set forth on Schedule 2.1(w) , Seller does not provide any express warranties, guaranties or assurances of products and services. For the past five (5) years, (a) there have not been (and there is no basis for alleging) any product recalls, withdrawals or seizures with respect to any of the products marketed, sold or delivered by Seller, and (b) there have not been (and there is no basis for alleging) any material claims against Seller alleging any defects or other deficiency (whether of design, materials, workmanship, labeling instructions or otherwise) in Seller’s services or products, or alleging any failure of the products or services of Seller to meet applicable specifications, warranties or contractual commitments.

(x) Full Disclosure . To the best knowledge of the Seller, no representation or warranty by Seller in this Agreement and no statement contained in the Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

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2.2 Representations and Warranties of Buyer . The Buyer represent and warrant to, and agrees with, the Seller and the Stockholders as follows:

(a) Organization . The Buyer is a corporation duly incorporated and in good standing under the laws of the State of Delaware.

(b) Binding Obligation . The Buyer has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. All corporate acts and other proceedings required to be taken by Buyer to authorize the execution, delivery and performance by Buyer of this Agreement and the transactions contemplated hereby, have been duly and properly taken. This Agreement has been duly-executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. The execution, delivery and performance by Buyer of this Agreement does not and will not conflict with, or result in any violation of, any provision of the Certificate of Incorporation or Bylaws of Buyer, or any provision of any law, ordinance, rule, regulation, judgment, order, decree, agreement, instrument or license applicable to Buyer or to its respective property or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Buyer in connection with its execution, delivery or performance of this Agreement.

(c) Full Disclosure . To the best knowledge of the Buyer, no representation or warranty by Buyer in this Agreement and no statement contained in any schedule to this Agreement or any certificate or other document furnished or to be furnished to the Seller or the Stockholders pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

ARTICLE 3

INTERIM COVENANTS

During the period from the date of this Agreement and continuing until the Closing, the Seller and the Stockholders each agree (except as expressly contemplated by this Agreement or to the extent that Buyer shall otherwise consents in writing) that:

3.1 Ordinary Course . The Seller and the Stockholders shall carry on the Seller’s Business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts consistent with past practice and policies to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers and others having business dealings with it to the end that its goodwill and ongoing business shall be unimpaired as a result of the transactions contemplated hereby.

3.2 Access to Information . Seller shall afford to Buyer and to Buyer’s accountants, counsel and other representatives, at Buyer’s sole cost and expense, reasonable access during normal business hours during the period prior to the Closing to all its books and records, and, during such period, Seller shall furnish promptly to Buyer all information concerning its business, properties and personnel as Buyer may reasonably request. Buyer will hold such information in confidence until such time as such information otherwise becomes publicly available and in the event of termination of this Agreement for any reason Buyer shall promptly return, or cause to be returned, to Seller all nonpublic documents obtained from Seller which it would not otherwise have been entitled to obtain; and shall use the information only for purposes of the transactions contemplated hereby and not in any other manner whatsoever. Whenever Buyer desires information pursuant to this Section 3.2 , Buyer shall request such information from the Seller and provide Seller with sufficient time to allow Buyer or its representatives to visit Seller’s place of business and review and copy such information.

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3.3 Disclosure Schedule . The parties acknowledge and agree that (i) the Seller has not yet delivered definitive disclosure schedules (the “ Disclosure Schedules ”) to this Agreement to the Buyer, and (ii) the Buyer has not been provided with copies of, nor had an opportunity to review, the items to be referred to on the Disclosure Schedule. The Seller shall to the Buyer all of Disclosure Schedules to the Agreement, and documents referred to thereon, in final form within 15 days of the date hereof. The Buyer shall have 15 days following delivery of such Disclosure Schedules and such documents in which to terminate this Agreement if the Buyer objects to any information contained in such Disclosure Schedules or the contents of any such document and Buyer and Seller cannot agree on mutually satisfactory modifications thereto.

3.4 Exclusivity . Neither the Seller nor the Stockholders shall and each shall cause their respective employees, affiliates, directors, or representatives not to, directly or indirectly, provide information regarding the Seller to, or initiate, negotiate, or hold any discussions or enter into any understanding or agreement with, any party other than the Buyer with respect to any Competitive Transaction (as defined below). To the extent such discussions or negotiations are on-going, they will be terminated. In addition, the Seller and the Stockholders each agree to immediately communicate to the Buyer the terms of any proposal relating to a Competitive Transaction received by any of the Seller or the Stockholders, or the employees, directors, or representatives of any of such parties. For purposes of this Agreement, a “ Competitive Transaction ” is a transaction involving, directly or indirectly, (i) the acquisition of the Seller or of all or any material portion of the assets of, or of any of the stock in, the Seller regardless of the structure of any such acquisition, or the authorization of any advisors of the Seller to take any action for the purposes of advancing any such acquisition with any party other than the Buyer, or (ii) the taking of any other action that is inconsistent with the implementation of this Agreement.

3.5 Notification of Certain Matters . From the date of this Agreement through the earlier of the Closing and the termination of this Agreement in accordance with its terms, Buyer and Seller shall give each other prompt notice in writing of: (a) the occurrence, or failure to occur, of any result, occurrence, fact, change, event or effect which occurrence or failure could, individually or in the aggregate, reasonably be expected to cause any of such party’s representations or warranties contained in this Agreement to be untrue or inaccurate in any material respect; (b) the failure by such party to comply with or satisfy in any respect any covenant, condition or agreement required to be complied with or satisfied by it under this Agreement; (c) any results, occurrences, facts, changes, events or effects has had, or would, individually or in the aggregate, reasonably be expected to have (i) a material adverse effect on the Business or the Seller or (ii) a material adverse effect on such party’s ability to consummate the transactions contemplated by this Agreement in a timely manner; or (d) any actions, suits, claims, investigations, audits or proceedings commenced or, to the knowledge of such party, threatened against the notifying party or otherwise affecting the notifying party, which relate to the consummation of the transactions contemplated by this Agreement.

ARTICLE 4

ADDITIONAL AGREEMENTS

4.1 Expenses . Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred by the Buyer, the Seller or the Stockholders in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs; provided, however, that if the Closing occurs, the Stockholders shall be responsible for and pay any and all transaction related expenses of the Seller if the Seller does not pay such expenses and none of such expenses shall be due and payable by the Seller following the Closing.

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4.2 Press Release . None of the parties hereto shall issue a press release or other publicity announcing the sale of the Purchased Assets or any other aspect of the transactions contemplated hereby without the prior written approval of the other party, unless such disclosure is required by applicable law or unless such disclosure is made by the Buyer or its affiliates following the Closing. The Seller and the Stockholders acknowledge that the Buyer’s parent company, 1847 Holdings LLC (the “ Parent ”), is required by federal securities laws to disclose the material terms of this Agreement through the filing with the SEC of a Current Report on Form 8-K and that the Parent may attach a copy of this Agreement as an exhibit to such Current Report or as an exhibit to the Parent’s next Quarterly Report on Form 10-Q.

4.3 Covenant Not to Compete . For a period of three years from and after the Closing (the “ Noncompetition Period ”), neither of the Seller nor the Stockholders will engage directly or indirectly in any business that is competitive with the Business in any geographic area in which the Business is conducted or in which the Buyer plans to conduct the Business as of the Closing Date; provided, however, that no owner of less than 1% 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, neither the Seller nor the Stockholders shall induce or attempt to induce any customer, or supplier of the Buyer or any affiliate of the Buyer 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, neither the Seller nor the Stockholders shall, 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 Buyer or an affiliate of the Buyer. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 4.3 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. Notwithstanding the foregoing, neither the Seller nor the Stockholders shall be required to comply with this Section 4.3 at any time that the Buyer is in material breach of this Agreement, the Buyer Note or any of the other Transaction Documents; provided that the Seller and the Stockholders provide the Buyer with written notice of such material breach and a thirty (30) day opportunity to cure such material breach.

4.4 Subordination . Seller and Stockholders acknowledge, understand and agree that the right to receive payments under the Buyer Note and any Earn Out Payments hereunder (collectively, “ Subordinated Payments ”) is and shall remain subordinate in right of payment to a revolving credit facility in favor of Burnley Capital or one or more of its affiliates and a term loan no greater than $1,500,000 in favor of SBCC and one or more of its affiliates (collectively, the “ Senior Debt ”) and, in furtherance thereof, agrees to execute and deliver to the holder of any Senior Debt (or its agent), upon request therefor by such holder (or such agent, as applicable), one or more subordination agreements in favor of the Buyer’s senior lenders (each a “ Subordination Agreement ”), in form and substance reasonably satisfactory to such holder (or agent), relating to the subordination of Sellers’ right to receive Subordinated Payments to such holder’s Senior Debt on such terms and conditions as may be required by such holders, including restrictions on the making of any Subordinated Payment if any default or event of default exists under the terms of such Senior Debt (or if the making of any payment due under any Subordinated Payment would result in any such default or event of default). Any term loan included in the definition of Senior Debt shall not exceed $1,500,000 and the $1,500,000 cap on any such term loan shall be decreased by any amounts repaid to the term loan lender under the Buyer’s term loan with such lender.

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4.5 Employee Benefit Matters . Seller shall be responsible for and shall, as of the Closing Date, have fully paid and satisfied in full all other amounts owed to any Employee as of the Closing Date (including, without limitation, all amounts owed through the most recent pay date prior to the Closing Date and all amounts owed to any Employee from and after such most recent pay date through the Closing Date), including payroll, wages, salaries, severance pay, accrued vacation, any employment, incentive, compensation or bonus agreements or other benefits or payments (including without limitation all payments, obligations and other entitlements associated with any Employee Benefit Plan) relating to the period of employment by Seller, or any Affiliate of Seller (to the extent related to the Business) or on account of the termination thereof, and Seller shall indemnify Buyer and hold Buyer harmless from any liabilities or liens thereunder.

4.6 Tax Matters . Seller shall pay any sales, use, transfer tax or similar taxes that may arise out of or result from the transactions consummated pursuant to this Agreement or the Transaction Documents. Following the Closing, Buyer and Seller shall cooperate fully, as and to the extent reasonably requested by the other party and at the expense of the other party, in connection with the filing of any tax returns and any audit, litigation or other proceeding with respect to taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer agrees to retain all books and records with respect to tax matters pertinent to Seller relating to any taxable period beginning before the Closing Date until the expiration of the applicable statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority. Seller and Buyer hereto will cooperate in the preparation and filing of all tax returns and other documents relating to transfer taxes, including any that would relate to an applicable exemption or reduction for such taxes.

4.7 Bylaws of the Buyer . The Stockholders acknowledge and agree that the Buyer Shares and the transfer thereof are governed by the terms and provisions of the bylaws of the Buyer and the Stockholders shall not sell, assign, pledge or otherwise transfer all or any portion of the Buyer Shares or any right or interest therein, whether voluntarily, involuntarily, by operation of law, by gift or otherwise, except by a transfer which meets the requirements specified in the bylaws of the Buyer. The Stockholders shall otherwise comply with the provisions of the bylaws of the Buyer as they relate to the Buyer Shares.

4.8 Management Fee . The Seller and the Stockholders acknowledge and agree that from and after the Closing Date, 1847 Partners LLC, a Delaware limited liability company, will charge the Buyer an annual management fee equal to the greater of $250,000 or 2% of adjusted net assets and which fee shall cover management consulting services to be provided by 1847 Partners LLC. Payment of the Management Fee will be subordinated to the payment of interest on the Buyer Note and the payment of interest on any other debt at the Buyer such that no payment of the management fee may be made if the Buyer is in default under the Buyer Note with regard to interest payments and, for the avoidance of doubt, such payment of the management fee will be contingent on the Buyer being in good standing on all associated loan covenants. During the period that that any amounts are owed under the Seller Note or the Earn-Out, the annual management fee shall be capped at $250,000.

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4.9 Rights to Participate in Future Stock Issuances .

(a) Subject to the terms and conditions of this Section 4.9 and applicable securities laws, if the Buyer proposes to offer or sell any New Securities (as defined below), the Buyer shall first offer such New Securities to the Stockholders. The Buyer shall give notice (the “ Offer Notice ”) to the Stockholders, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities. By notification to the Buyer within ten (10) days after the Offer Notice is given, the Stockholders may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the common stock of the Buyer then held by the Stockholders (including all shares of common stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of any derivative securities held by the Stockholders) bears to the total common stock of the Buyer then outstanding (assuming full conversion and/or exercise, as applicable, of all outstanding securities of the Buyer that are convertible into, or exercisable or exchangable for, common stock). The closing of any sale pursuant to this Section 4.9(c) shall occur within the later of thirty (30) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.9 .

(d) If the Stockholders do not notify the Buyer of their intent to purchase New Securities referred to in the Offer Notice, the Buyer may, during the ninety (90) day period following the expiration of the periods provided in Section 4.9(c) , offer and sell the New Securities (including that portion subject to this right of first offer) to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Buyer does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Stockholders in accordance with this Section 4.9 .

(e) The right of first offer in this Section 4.9 shall not be applicable to Exempted Securities (as defined below).

(f) The right of first offer set forth in this Section 4.9 shall terminate once the Stockholders, in the aggregate, own less than ten percent (10%) of the issued and outstanding capital stock of the Buyer.

(g) For purposes of this Section 4.9 , the following terms shall have the following meanings ascribed to them: “ New Securities ” means, collectively, equity securities of the Buyer, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities other than Exempted Securities; and “ Exempted Securities ” means (i) Common Stock or other securities of the Buyer issuable under the Buyer’s equity incentive plan; (ii) Common Stock or other securities issuable upon a stock split, stock dividend, or any subdivision of stock; (iii) Common Stock or other securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction; (iv) Common Stock or other securities issued to suppliers or third party service providers in connection with the provision of goods or services; (v) Common Stock or other securities issued pursuant to the acquisition of another entity by the Buyer by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement; and (vi) Common Stock or other securities issued in connection with collaboration, technology license, development, marketing or other similar agreements or strategic partnerships.

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ARTICLE 5

CONDITIONS PRECEDENT

5.1 Conditions to Each Party’s Obligation . The respective obligation of each party hereunder shall be subject to the satisfaction prior to the Closing Date of the following conditions:

(a) Approvals . All authorizations, consents, orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any governmental entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or been obtained.

(b) Legal Action . No action, suit or proceeding shall have been instituted or threatened before any court or governmental body seeking to challenge or restrain the transactions contemplated hereby.

(c) Closing Documents . The Buyer Note, Buyer Shares and all other Transaction Documents to be delivered at the Closing shall be in form and substance reasonably satisfactory to each of the parties.

5.2 Conditions of Obligations of Buyer . The obligations of Buyer to effect the transactions contemplated hereby are subject to the satisfaction of the following conditions unless waived by Buyer:

(a) Representations and Warranties . The representations and warranties of the Seller and the Stockholders set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and Buyer shall have received a certificate signed by the chief executive officer of Seller and Stockholders to such effect.

(b) Performance of Obligations of Seller . The Seller shall have performed all obligations required to be performed by it under this Agreement prior to the Closing Date, and Buyer shall have received a certificate signed by the chief executive officer of each Seller to such effect.

(c) Satisfactory Completion of Due Diligence . The Buyer shall have completed its due diligence review of the Seller and the results thereof shall be satisfactory to the Buyer in its sole discretion.

(d) Financing . 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 Business after the Closing, including the Senior Debt described in Section 4.4 .

(e) Minimum Working Capital . The Seller shall have delivered to the Buyer a balance sheet as of a date that is within five days of the Closing Date and the working capital of the Business as derived from such balance sheet shall be at least ($1,802,000) (negative), including a reserve for advertising and marketing expenses that is consistent with past practice.

(f) No Material Adverse Change . Since December 31, 2018, there shall have been no material adverse change in the financial condition, results of operations, business or assets of Seller.

(g) Consents and Actions . All requisite consents of any third parties to the transactions contemplated by this Agreement shall have been obtained.

(h) Release of Security Interests . Provision satisfactory to Buyer shall have been made for the release of any security interests which encumber any of the Purchased Assets and the cost of such releases shall be borne by the Seller.

(i) Employment Agreement . The Buyer shall have entered into an employment agreement with Michael Goedeker that is in form and substance satisfactory to the Buyer and Michael Goedeker.

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(j) Lease Agreement . The Buyer shall have entered into a lease for the Seller’s current operating premises with the landlord of such premises, which lease shall be in form and substance satisfactory to the Buyer.

(k) Closing Deliveries . The Seller shall deliver, or cause to be delivered, to Buyer at or prior to the Closing the following documents:

(i) Such certificates, executed by officers of Seller, as Buyer may reasonably request.

(ii) Consents executed by all necessary parties to permit Buyer to assume the Seller’s interest in any contracts acquired among the Purchased Assets.

(iii) A bill of sale and such other documents as may be required to convey all of Seller's right, title and interest in all personal property included in the Purchased Assets.

(iv) Such other documents, instruments or certificates as shall be reasonably requested by Buyer or its counsel.

5.3 Conditions of Obligations of Seller . The obligations of the Seller to effect the transactions contemplated hereby are subject to the satisfaction of the following conditions unless waived by Seller:

(a) Representations and Warranties . The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and the Seller shall have received a certificate signed by the chief executive officer of the Buyer to such effect.

(b) Performance of Obligations of Buyer . Buyer shall have performed all obligations required to be performed by it and this Agreement prior to the Closing Date, and the Seller shall have received a certificate signed by the chief executive officer of Buyer to such effect.

(c) Employment Agreement . The Buyer shall have entered into an employment agreement with Michael Goedeker that is in form and substance satisfactory to the Buyer and Michael Goedeker.

(d) Lease Agreement . The Buyer shall have entered into a lease for the Seller’s current operating premises with the landlord of such premises, which lease shall be in form and substance satisfactory to the Seller.

(e) Consents and Actions . All requisite consents of any third parties or governmental agencies to the transactions contemplated hereby shall have been obtained.

(f) Other Documents . The Seller shall have received the Buyer Note, the Buyer Shares and such other documents, instruments or certificates as shall be reasonably requested by the Seller or its counsel.

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ARTICLE 6

INDEMNIFICATION

6.1 Survival of Representations and Warranties . All of the representations and warranties of the Seller and the Stockholders contained in this Agreement shall survive the Closing and continue in full force and effect for a period of twelve (12) months thereafter, provided that the representations and warranties contained in Sections 2.1(b) (Binding Obligation), 2.1(d) (Title to Personal Property), 2.1(j) (Employee Benefit Plans), 2.1(k) (Environmental Matters) and 2.1(n) (Taxes) (such representations being referred to herein as the “ Fundamental Representations ”) shall continue in full force and effect for a period equal to the applicable statute of limitations. The representations and warranties of the Buyer shall survive the Closing and continue in full force and effect for a period equal to the applicable statute of limitations. This Section 6.1 shall survive so long as any representations, warranties or indemnification obligations of any party survive hereunder.

6.2 Indemnification Provisions for Benefit of the Buyer .

(a) Subject to Section 6.1 , in the event the Seller or the Stockholders breaches any of its respective representations, warranties, and covenants contained in this Agreement, and, if there is an applicable survival period pursuant to Section 6.1 above, provided that the Buyer makes a written claim for indemnification against the Seller and the Stockholders pursuant to Section 8.6 below within such survival period, which written claim shall, to the extent possible, specifically identify the basis for indemnification and any relevant facts forming the basis for such claim, then the Seller and the Stockholders agree to indemnify the Buyer and any affiliate of the Buyer from and against the entirety of any Adverse Consequences (as defined below) the Buyer or such affiliate of the Buyer may suffer through and after the date of the claim for indemnification (including any Adverse Consequences the Buyer or such affiliate of the Buyer may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach. For purposes of this Agreement, “ Adverse Consequences ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, lost value, expenses, and fees, including court costs and attorneys' fees and expenses.

(b) In addition to the indemnification provided in Section 6.2(a) , the Seller and the Stockholders agrees to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer and any affiliate of the Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by:

(i) Any Excluded Liability; and

(ii) Any liability of Seller which is not an Assumed Liability and which is imposed upon the Buyer under any bulk transfer law of any jurisdiction or under any common law doctrine of de facto merger or successor liability so long as such liability arises out of the ownership, use or operation of the assets of the Seller, or the operation or conduct of the Business prior to the Closing.

6.3 Indemnification Provisions for Benefit of the Seller and the Stockholders .

(a) In the event the Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and, if there is an applicable survival period pursuant to Section 6.1 above, provided that any of the Seller or the Stockholders make a written claim for indemnification against the Buyer pursuant to Section 8.6 below within such survival period which written claim shall, to the extent possible, specifically identify the basis for indemnification and any relevant facts forming the basis for such claim, then the Buyer agrees to indemnify the Seller and the Stockholders from and against the entirety of any Adverse Consequences the Seller and the Stockholders may suffer through and after the date of the claim for indemnification (including any Adverse Consequences the Seller and the Stockholders may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach.

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(b) In addition to the indemnification provided in Section 6.3(a) , the Buyer agrees to indemnify the Seller and the Stockholders from and against the entirety of any Adverse Consequences any Seller or the Stockholders may suffer resulting from, arising out of, relating to, in the nature of, or caused by:

(i) Any Assumed Liability; or

(ii) Any liability (other than any Excluded Liability) asserted by a third party against any of the Seller or the Stockholders which arises out of the ownership of the Purchased Assets after the Closing or the operation by the Buyer of the business conducted with the Purchased Assets after the Closing Date.

6.4 Limitation on Indemnification . Notwithstanding anything to the contrary in Section 6.2(a) or Section 6.3(a) , in no event shall the Buyer or the Parent have or assert any claim against the Seller or the Stockholders, or the Seller or the Stockholders have or assert any claim against the Buyer and the Parent based upon or arising out of the breach of any representation or warranty, unless, until and to the extent that the aggregate of all such claims under Section 6.2(a) , in the case of claims by the Buyer, or under Section 6.3(a) , in the case of claims by the Seller or the Stockholders, exceeds a Fifty Thousand Dollar ($50,000) aggregate threshold (at which point the indemnifying party will be obligated to indemnify the indemnified party from and against all such Adverse Consequences relating back to the first dollar). Notwithstanding the foregoing, the threshold limitation expressed in the immediately preceding sentence shall not apply to claims by the Buyer for breach by the Seller or the Stockholders of any of the Fundamental Representations. Furthermore, Buyer’s aggregate remedy with respect to any and all Adverse Consequences for breaches of representations, warranties and covenants hereunder by the Seller or the Stockholders shall not exceed $2,000,000.

6.5 Matters Involving Third Parties .

(a) If any third party shall notify any party (the “ Indemnified Party ”) with respect to any matter (a “ Third Party Claim ”) which may give rise to a claim for indemnification against any other Party (the “ Indemnifying Party ”) under this Article 6 , then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced by such delay.

(b) Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given written notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (C) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party (it being understood that any Third Party Claim involving a person or entity which is a customer or supplier of the Buyer following the Closing, will be deemed to involve the possibility of such a precedential custom or practice), and (E) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.

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(c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 6.5(b) above, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably).

(d) In the event any of the conditions in Section 6.5(b) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Article 6 .

6.6 Recoupment Under Buyer Note and Earn-Out .

(a) If the Seller is obligated to indemnify the Buyer or any other Indemnified Person for any indemnification claim in accordance with this Article 6 , Buyer may set-off the amount of such claim against the amounts due to the Seller under the Buyer Note or that would otherwise be owed to the Seller under the Earn-Out.

(b) If the Buyer intends to set-off any amount hereunder, Buyer shall provide not less than thirty (30) days’ prior written notice to the Seller of its intention to do so, together with a reasonably detailed explanation of the basis therefor (a “ Set-Off Notice ”). If, within ten (10) days of its receipt of a Set-Off Notice, the Seller provides Buyer with written notice of Seller’s dispute with Buyer’s right to make such set-off, Buyer and Seller (and their respective representatives and advisors) shall meet (which may be accomplished telephonically) in good faith within five (5) days to attempt to resolve their dispute. If such dispute remains unresolved despite Buyer’s good faith attempt to meet with the Seller and resolve such dispute, Buyer may set-off under this Section 6.6 only (a) with respect to those indemnification claims that have been Finally Determined (as defined below), (b) as described in Section 6.6(c) relating to the escrow of the Earn-Out Payments or payments due under the Buyer Note or (c) with the prior written consent of the Seller.

(c) In the event of a dispute with respect to any indemnification claim against the Seller made in good faith pursuant to this Article 6 , and the liability for and amount of Adverse Consequences therefore, Buyer may withhold any payments due to the Seller under the Buyer Note or the Earn-Out, up to the disputed amount, but only if the Buyer deposits such withheld amounts into escrow account with a mutually agreeable title company in St. Louis, Missouri in accordance with a mutually agreed upon escrow agreement, provided that if the parties cannot agree upon the terms of the escrow agreement or the escrow agent, the Buyer shall deposit the withheld payments with a court of competent jurisdiction in St. Louis, Missouri. For purposes of this Agreement, the term “ Finally Determined ” shall mean with respect to any indemnification claim made, and the liability for and amount of Losses therefor, when the parties to such claim have so determined by mutual agreement or, if disputed, when a judgment has been issued by a court or arbitral panel having proper jurisdiction.

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6.7 Sole and Exclusive Remedy . Except with respect to claims for specific performance or other equitable remedies and for claims based upon fraud, in respect of any breach of any representations, warranties, covenant agreements or obligations required to be performed on or after Closing pursuant to this Agreement, this Article VI shall be the sole and exclusive remedy for Adverse Consequences of any Indemnified Party and each Party waives all statutory, common law and other claims with respect thereto, other than claims for indemnification under this Article VI from and after the Closing with respect to breaches of this Agreement. In addition, the Buyer may only look to satisfy any indemnification claim against the Seller or the Stockholders for Adverse Consequences as a set off to the Buyer Note and the Earn-Out and shall have no other right to recover damages for Adverse Consequences.

ARTICLE 7

TEMINATION, AMENDMENT AND WAIVER

7.1 Termination . This Agreement may be terminated at any time prior to the Closing:

(a) by mutual consent of the Buyer, the Stockholders and the Seller;

(b) by any of the Buyer, the Stockholders or the Seller if there has been a material misrepresentation or breach of covenant or agreement contained in this Agreement on the part of the other and such breach of a covenant or agreement has not been promptly cured after at least fourteen (14) day’s written notice is given;

(c) by Buyer if any of the conditions set forth in Sections 5.1 and 5.2 shall not have been satisfied before the 90 ^th day following the date that the Buyer has received Disclosure Schedules in accordance with Section 3.3 of this Agreement (the “ Outside Date ”), or such later date as the Buyer, the Stockholders and Seller shall mutually agree in writing;

(d) by the Seller or the Stockholders if any of the conditions set forth in Section 5.1 or Section 5.3 shall not have been satisfied before the Outside Date, or such later date as the Buyer, Stockholders and Seller shall mutually agree in writing.

7.2 Amendment . This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

ARTICLE 8

GENERAL PROVISIONS

8.1 Sales Taxes . All sales and use taxes, if any, due under the laws of any state, any local government authority, or the federal government of the United States, in connection with the purchase and sale of the Purchased Assets shall be paid by Buyer.

8.2 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

8.3 Governing Law and Arbitration . This Agreement shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Missouri. Any dispute shall be resolved by arbitration conducted in St. Louis Missouri, in accordance with Chapter 435 of the Missouri Revised Statutes. The provisions of this Section 8.3 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.

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8.4 Entire Agreement . This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to the subject matter hereof.

8.5 Succession and Assignment . This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of the Buyer, the Stockholders and the Seller; provided, however, that the Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its affiliates, (ii) designate one or more of its affiliates to perform its obligations hereunder (in any or all of which cases the Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder), and (iii) collaterally assign any or all of its rights and interests hereunder to one or more lenders of the Buyer.

8.6 Notices .

(a) All notices, requests, claims, demands and other communications among the Parties shall be in writing and given to the respective Parties at their respective addresses set forth on the signature page to this Agreement (or to such other address as the Party shall have furnished to the other Parties in writing in accordance with the provisions of this Section 8.6 ).

(b) All notices shall be given (i) by delivery in person (ii) by a nationally recognized next day courier service, (iii) by first class, registered or certified mail, postage prepaid, (iv) by facsimile or (v) by electronic mail to the address of the party specified on the signature page to this Agreement or such other address as either party may specify in writing.

(c) All notices shall be effective upon (i) receipt by the party to which notice is given, or (ii) on the fifth (5th) day following mailing, whichever occurs first.

8.7 Severability . Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

8.8 Specific Performance . Each of the parties acknowledges and agrees that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the parties agrees that the other parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity.

[Signature page follows]

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IN WITNESS WHEREOF, the Buyer, the Stockholders and the Seller have executed this Agreement as of the date first written above.

 

BUYER:   1847 GOEDEKER INC.			SELLER:   GOEDEKER TELEVISION CO., INC.
By:	/s/ Ellery W. Roberts		By:	/s/ Steve Goedeker
Name:	Ellery W. Roberts		Name:	Steve Goedeker
Title:	Chief Executive Officer		Title:

 

STOCKHOLDERS:
/s/ Steve Goedeker		/s/ Mike Goedeker
STEVE GOEDEKER		MIKE GOEDEKER

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EXHIBIT 10.2

AMENDMENT NO. 1

TO THE

ASSET PURCHASE AGREEMENT

This AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT (this “ Amendment ”), dated as of April 5, 2019, is entered into by and among 1847 Goedeker Inc. , a Delaware corporation (“ Buyer ”), 1847 Goedeker Holdco Inc ., a Delaware corporation (“ Holdco ”), Goedeker Television Co., Inc. , a Missouri corporation (“ Seller ”), and Steve Goedeker and Mike Goedeker (the “ Stockholders ”, and each individually, a “ Stockholder ”).

RECITALS

A. The Buyer, the Seller and the Stockholders have previously entered in that certain Asset Purchase Agreement, dated January 18, 2019 (the “ Asset Purchase Agreement ”).

B. The parties hereto desire to amend the Asset Purchase Agreement as set forth herein.

C. Pursuant to Section 7.2 of the Asset Purchase Agreement, the Asset Purchase Agreement may be amended by the Parties only by an instrument in writing signed on behalf of the Buyer, the Seller and the Stockholders.

D. Holdco is a wholly-owned subsidiary of 1847 Holdings LLC, a Delaware limited liability company, and the parent company of Buyer.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

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

2. Amendments .

a. Section 1.4(a) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety to read as follows:

“In consideration for the sale, assignment and delivery of the Purchased Assets, Buyer shall (i) pay an aggregate purchase price equal to Six Million, Two Hundred Thousand Dollars ($6,200,000) (the “ Purchase Price ”), as the same may be adjusted pursuant to this Agreement, payable in accordance with this Section 1.4(a) on the Closing Date, (ii) assume the Assumed Liabilities and (iii) issue to each of Steve Goedeker and Michael Goedeker shares of the Common Stock of Holdco equal to 11.25% non-dilutable interest in all of the issued and outstanding common stock of Holdco as of the Closing Date (the “ Holdco Shares ”).”

b. Section 2.3 is hereby added to the Asset Purchase Agreement as follows:

“2.3 Representations and Warranties of Holdco . Holdco represent and warrant to, and agrees with, the Seller and the Stockholders as follows:

 

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(a) Organization . Holdco is a corporation duly incorporated and in good standing under the laws of the State of Delaware.

(b) Binding Obligation . Holdco has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. All corporate acts and other proceedings required to be taken by Holdco to authorize the execution, delivery and performance by Holdco of this Agreement and the transactions contemplated hereby, have been duly and properly taken. This Agreement has been duly-executed and delivered by Holdco and constitutes the legal, valid and binding obligation of Holdco, enforceable against Holdco in accordance with its terms. The execution, delivery and performance by Holdco of this Agreement does not and will not conflict with, or result in any violation of, any provision of the Certificate of Incorporation or Bylaws of Holdco, or any provision of any law, ordinance, rule, regulation, judgment, order, decree, agreement, instrument or license applicable to Holdco or to its respective property or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Holdco in connection with its execution, delivery or performance of this Agreement.

(c) Full Disclosure . No representation or warranty by Holdco in this Agreement and no statement contained in any schedule to this Agreement or any certificate or other document furnished or to be furnished to the Seller or the Stockholders pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.”

c. Section 4.7 as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:

“ Bylaws of Holdco . The Stockholders acknowledge and agree that the Holdco Shares and the transfer thereof are governed by the terms and provisions of the bylaws of Holdco and the Stockholders shall not sell, assign, pledge or otherwise transfer all or any portion of the Holdco Shares or any right or interest therein, whether voluntarily, involuntarily, by operation of law, by gift or otherwise, except by a transfer which meets the requirements specified in the bylaws of the Buyer. The Stockholders shall otherwise comply with the provisions of the bylaws of Holdco as they relate to the Holdco Shares.”

d. A new Section 4.10 is added to the Asset Purchase Agreement, which new section shall be captioned “Nonassignable Contracts” and shall read in its entirety as follows:

“4.10 Nonassignable Contracts . This Agreement shall not constitute an assignment or an attempted assignment of that certain Digital Marketing Agreement with Power Digital Marketing (the “ Marketing Agreement ”). The Seller shall cooperate with the Buyer in determining a reasonable arrangement designed to provide for the Buyer the benefits under the Marketing Agreement. In consideration for Seller so cooperating, Buyer shall pay to Seller on the date hereof a total of $20,000 which amount Seller shall use to pay Power Digital Marketing for amounts due under the Marketing Agreement for services to be rendered during the months of April 2019 and May 2019. Seller shall cause the Marketing Agreement to be terminated as of May 30, 2019 to ensure that Seller no longer has any obligations under the Marketing Agreement.”

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e. A new Section 4.11 is added to the Asset Purchase Agreement, which new section shall be captioned “Release of Tax Lien” and shall read in its entirety as follows:

“4.11 Release of Tax Lien . The Seller hereby agrees to use commercially reasonable efforts to have released within 60 days of the Closing Date that certain Missouri Department of Revenue tax lien (Lien Number 200226705001967) and to provide Buyer with evidence of such release.”

f. Section 5.3(a) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:

“ Representations and Warranties . The representations and warranties of Buyer and Holdco set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and the Seller shall have received a certificate signed by the chief financial officer of the Buyer and Holdco to such effect.”

g. Section 5.3(b) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:

“ Performance of Obligations of Buyer and Holdco . Each of Buyer and Holdco shall have performed all obligations required to be performed by it and this Agreement prior to the Closing Date, and the Seller shall have received a certificate signed by the chief financial officer of Buyer and Holdco to such effect.

h. Each reference to “Buyer Shares” in the Asset Purchase Agreement is hereby amended to read, and each such reference is hereby deemed to refer to, “Holdco Shares.”

3. Joinder . Holdco hereby agrees, effective as of the date hereof, to become a party to the Asset Purchase Agreement, as amended by this Amendment.

4. Effect of Amendment . Except as amended as set forth above, the Asset Purchase Agreement shall continue in full force and effect. In the event of a conflict between the provisions of this Amendment and the Asset Purchase Agreement, this Amendment shall prevail and govern.

5. Counterparts . This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

6. Governing Law . This Amendment shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Missouri. Any dispute shall be resolved by arbitration conducted in St. Louis Missouri, in accordance with Chapter 435 of the Missouri Revised Statutes. The provisions of this Section 5 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Buyer, Holdco, the Seller and the Stockholders have executed this Amendment as of the date first written above.

 

BUYER:   1847 GOEDEKER INC.			SELLER:    GOEDEKER TELEVISION CO., INC.
By:	/s/ Robert D. Barry		By:	/s/ Steve Goedeker
Name:	Robert D. Barry		Name:	Steve Goedeker
Title:	Chief Financial Officer		Title:	President
HOLDCO :   1847 GOEDEKER HOLDCO INC.			13850 Manchester Rd. Ballwin, MO 63011 Attention: Steve Goedeker
			Facsimile:
By:	/s/ Robert D. Barry		Email: tevegoedeker@gmail.com
Name:	Robert D. Barry
Title:	President		with a copy, which shall not constitute notice to Seller, to:

 

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STOCKHOLDERS:
/s/ Steve Goedeker		/s/ Mike Goedeker
STEVE GOEDEKER		MIKE GOEDEKER

  

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EXHIBIT 10.3

This instrument and the indebtedness evidenced hereby, and the rights and remedies of the holders of this instrument, are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (Respecting Seller Note and Earn Out Payments) (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions thereof, the “Subordination Agreement”) dated as of April 5, 2019, by and among Goedeker Television Co., Inc., a Missouri corporation, and Burnley Capital LLC, a Delaware limited liability company, to the Senior Indebtedness (as defined in the Subordination Agreement); and each holder of this instrument, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement.

This instrument and the indebtedness evidenced hereby, and the rights and remedies of the holders of this instrument, are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (Respecting Seller Note and Earn Out Payments) (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions thereof, the “Subordination Agreement”) dated as of April 5, 2019, by and among Goedeker Television Co., Inc., a Missouri corporation, and Small Business Community Capital L.P., a Delaware limited liability company, to the Senior Indebtedness (as defined in the Subordination Agreement); and each holder of this instrument, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS 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 REASONABLY 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 GOEDEKER INC.

9% SUBORDINATED PROMISSORY NOTE

FOR VALUE RECEIVED , 1847 Goedeker Inc., a Delaware corporation (the “ Company ”), promises to pay to Steve Goedeker, in his capacity as the Sellers’ Representative (the “ Holder ”), the principal sum of Four Million, One Hundred Thousand Dollars ($4,100,000.00) (the “ Principal ”) in lawful money of the United States of America, with interest payable thereon at the rate of nine percent (9%) per annum. The unpaid principal amount hereof and all accrued but unpaid interest thereon shall be paid in full to the Holder on the fifth (5 ^th ) anniversary of 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 Asset Purchase Agreement, dated January 18, 2019 (the “ Purchase Agreement ”), among the Company, the Holder, Mike Goedeker and Goedeker Television Co., Inc. (the “ Seller ”), pursuant to which the Company acquired all or substantially all of the assets of the Seller.

 

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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 outstanding principal amount of this Note shall be amortized on a five-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to this Note (the “ Amortization Schedule ”) with all of the unpaid principal being fully paid on the Maturity Date, unless this Note has been earlier redeemed. Notwithstanding the foregoing, upon the sale of all or substantially all of the assets of the Company or a sale by 1847 Holdings LLC to an unaffiliated third party of a controlling interest in the Company (whether such sale takes place through a merger, share exchange, stock sale or other structure), the unpaid principal amount and all accrued but unpaid Interest thereon shall automatically become due and payable and the proceeds of any such sale, after the payment of obligations to the Senior Indebtedness, shall be first used to repay amounts due under this Note.

2. Interest .

(a) Computation . Interest (the “ Interest ”) shall accrue on the unpaid principal amount of this Note from the date hereof until such principal amount is repaid in full at the rate of nine percent (9%) per annum. Interest shall be paid in accordance with the Amortization Schedule with all unpaid Interest being paid on the Maturity Date or the date of the redemption of this Note. 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.

(b) Taxes, Charges, and Expenses . The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.

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

 

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(a) Non-Payment . The Company shall default in the payment of the principal of, or accrued interest on, 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 any of the Transaction Documents; or

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

(d) Illegality of Note . Any court of competent jurisdiction issues an order declaring the Note or any provision thereunder to be illegal;

(e) Cross Default . There occurs with respect to any Senior Indebtedness (as defined below): (i) a default with respect to any payment obligation thereunder that then entitles the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity, or (ii) any other default thereunder that entitles, and has caused, the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity; or

(f) 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;

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 thirty (30) calendar days in the case of events under Sections 4(b) through 4(d) or for a period of five (5) calendar days in the case of an event under Section 4(e) (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, 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. If an Event of Default specified in Section 4(f) above occurs, the principal of, and accrued interest on, the Note shall automatically, and without any declaration or other action on the part of any Holder, become immediately due and payable.

5. Affirmative Covenants of the Company . The Company hereby agrees that, so long as the Note remains outstanding and unpaid, or any other amount is owing to the Holder hereunder, the Company will:

 

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(a) Corporate Existence and Qualification . Take the necessary steps to preserve its corporate existence and its right to conduct business in all states in which the nature of its business requires qualification to do business;

(b) Compliance with Law . Comply with the charter and bylaws or other organizational or governing documents of the Company, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon the Company or any of its property or to which each of the Company or any of its properties is subject;

(c) Taxes . Duly pay and discharge all taxes or other claims, which might become a lien upon any of its property except to the extent that any thereof are being in good faith appropriately contested with adequate reserves provided therefor;

(d) Further Assurances . The Company shall execute and deliver any and all such further documents and take any and all such other actions as may be reasonably necessary or appropriate to carry out the intent and purposes of this Note and to consummate the transactions contemplated herein.

6. Subordination .

(a) All claims of the Holder to principal, interest and any other amounts at any time owed under this Note (collectively, “ Junior Indebtedness ”) is hereby expressly subordinated in right of payment, as herein set forth, to the prior payment in full of all Senior Indebtedness (as defined below). No payment under Junior Indebtedness shall be made by the Company, nor shall the Holder exercise any remedies under the Junior Indebtedness (including taking any legal action (whether judicial or otherwise) to collect the Junior Indebtedness), if, at the time of such payment, exercise or immediately after giving effect thereto, (i) there shall exist any material “Default” or “Event of Default” under any agreements governing any of the Senior Indebtedness or (ii) the maturity of any of the Senior Indebtedness has been accelerated and such acceleration has not been waived or such Senior Indebtedness has not been paid in full; provided, however, that (x) in the event that the holder of any Senior Indebtedness accelerates such Senior Indebtedness, then the Holder may accelerate the indebtedness evidenced by this Note, and (y) if the Company is permitted under the terms of the Senior Indebtedness to pay an amount due and owing under this Note and fails to make such payment, then so long as the terms of the Senior Indebtedness do not prohibit such action, the Holder may exercise its rights to be paid such amount, but only such amount (and Holder shall not be permitted to accelerate hereunder).

(b) Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money, before any payment is made under Junior Indebtedness; and upon any such dissolution or winding up or liquidation or reorganization, any distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holder as holder of the Junior Indebtedness would be entitled except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holder if received by Holder, directly to the holder of the Senior Indebtedness, or its representatives, to the extent necessary to pay all such Senior Indebtedness in full, in money, after giving effect to any concurrent prepayment or distribution to or for the benefit of the holders of such Senior Indebtedness, before any payment or distribution is made to the Holder with respect to the Junior Indebtedness.

 

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(c) If the holders of the Senior Indebtedness in good faith believe Holder may fail to timely file a proof of claim in any such proceeding, the holder(s) of the Senior Indebtedness may do so for Holder.

(d) In the event that any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing where the holder has actual knowledge of a Senior Indebtedness payment default shall be received by the Holder before all the Senior Indebtedness is paid in full, or provisions made for such payment, in accordance with its terms, such payment or distribution shall be held for the benefit of, and shall be paid over or delivered to, the holders of the Senior Indebtedness or their representative or representatives, as their respective interests may appear, for application to the payment of all the Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full, in money, in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness.

(e) The provisions hereof are solely for the purpose of defining the relative rights of the holders of the Senior Indebtedness on the one hand and the Holder as holder of the Junior Indebtedness on the other hand, and nothing herein shall impair, as between the Company and the Holder, the obligations of the Company under the Junior Indebtedness, which are unconditional and absolute. With this in mind, notwithstanding the other provisions of this Section 6 , if and so long as all documents governing the Senior Indebtedness permit one of the actions restricted by this Section 6 , the restriction shall be waived and the restricted action permitted hereunder.

(f) No right of any present or future holder of any Senior Indebtedness to enforce the subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any act or failure to act, in good faith, by any such holder of the Senior Indebtedness, or any noncompliance by the Company with the terms, provisions and covenants hereof, regardless of any knowledge thereof any holder of the Senior Indebtedness may have or be otherwise charged with. Without in any way limiting the generality of the foregoing, the holders of the Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Holder, without incurring responsibility to the Holder and without impairing or releasing the subordination provided in this Note or the obligations hereunder of the Holder to the holders of the Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or create, renew or alter, the Senior Indebtedness, or otherwise amend or supplement in any manner the Senior Indebtedness or any instrument evidencing the same or any agreement under which the Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing the Senior Indebtedness; (iii) release any person liable or contingently liable in any manner for the payment or collection of the Senior Indebtedness; and/or (iv) exercise or refrain from exercising any rights against the Company or any other person.

 

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(g) Each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of this Note, shall be entitled to rely on the subordination provisions set forth in this Note.

(h) Notwithstanding the provisions of this Section 6 , the Holder shall not be charged with knowledge of the existence of facts which would prohibit the making of any payments on the Junior Indebtedness unless and until the holder(s) of the Senior Indebtedness or their representatives send written notice to Holder of same.

(i) Subject to the payment in full of all the Senior Indebtedness, Holder as holder of the Junior Indebtedness shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until the Senior Indebtedness shall be paid in full.

(j) The Holder shall confirm (in writing) the above subordination provisions if requested by any holder of the Senior Indebtedness, and shall execute and deliver such additional subordination agreements, consistent with the foregoing as any holder of Senior Indebtedness may require.

(k) For purposes hereof, “ Senior Indebtedness ” means, with respect to the Company, all indebtedness of the Company, whether outstanding on the date of the execution of this Note or thereafter created, to Burnley Capital and SBCC or one or more of their respective affiliates; provided, however, that any term loan included in the definition of Senior Indebtedness shall not exceed $1,500,000 and the $1,500,000 cap on any such term loan shall be decreased by any amounts repaid to the term loan lender under the Company’s term loan with such lender.

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. 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.

 

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9. 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.

10. 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 B 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.

11. 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.

12. 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.

13. Governing Law and Arbitration . This Note shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Missouri. Any dispute shall be resolved by arbitration conducted in St. Louis Missouri, in accordance with Chapter 435 of the Missouri Revised Statutes. The provisions of this Section 13 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.

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

15. 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.

[Signature Page Follows]

 

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

	1847 GOEDEKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Title:	Chief Financial Officer

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EXHIBIT B

Form of Assignment

TO: 1847 Goedeker Inc.,

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________ (name) , __________________________________________ (address) , US$____________ of 9% Subordinated Promissory Note (“Note”) of 1847 Goedeker Inc. (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:

1.	Signature of Holder must be the signature of the person appearing on the face of the Note.
2.	If the transfer of Note is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company.

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EXHIBIT 10.4

SUBORDINATION AGREEMENT

(Respecting Seller Note and Earn Out Payments)

This Subordination Agreement (this “ Agreement ”) is made as of April 5, 2019, by and between Goedeker Television Co., Inc., a Missouri corporation (the “ Subordinated Creditor ”), and Burnley Capital LLC, a Delaware limited liability company (the “ Senior Lender ”). Each of the Subordinated Creditor and Senior Lender may be referred to herein as a “Creditor” or collectively as the “Creditors”.

RECITALS:

A. 1847 Goedeker Inc., a Delaware corporation (the “ Borrower ”), and 1847 Goedeker Holdco Inc. (“ Holdco ” and together with the Borrower, the “ Loan Parties ”) are now, or may hereafter be, indebted to Senior Lender as a result of extensions of credit under that certain Loan and Security Agreement, dated as of the date hereof, among the Loan Parties and the Senior Lender (as such agreement may be amended, modified, supplemented, replaced or refinanced from time to time, the “ Loan Agreement ”).

B. Borrower is indebted to Subordinated Creditor under that certain 9% Subordinated Promissory Note of even date herewith, a copy of which is attached hereto as Exhibit A (the “ Subordinated Note ”).

C. The Subordinated Creditor is entitled to receive from Borrower “Earn Out Payments” as such term is defined in the Asset Purchase Agreement (the “ Earn Out Payments ”), of even date herewith, a copy of which is attached hereto as Exhibit B (the “ Asset Purchase Agreement ”).

D. Subordinated Creditor and Senior Lender desire to agree to their respective rights, priorities and interests regarding each of their loans to Borrower, all as set forth herein.

AGREEMENTS:

IN CONSIDERATION of the foregoing premises, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinated Creditor and Senior Lender agree as follows:

1. Subordination . The payment of all amounts owed under the Subordinated Note and all Earn Out Payments (collectively, the “ Subordinated Indebtedness ”) is hereby subordinated to the payment in full of all indebtedness owed to the Senior Lender under the Loan Agreement and all other loan documents, whether now existing or hereafter incurred or created (the “ Senior Indebtedness ”), and no payments or other distributions whatsoever in respect of any Subordinated Indebtedness shall be made by the Loan Parties and no property or assets of the Loan Parties shall be applied to the purchase, redemption or other acquisition or retirement of any Subordinated Indebtedness, until the Senior Indebtedness shall have been indefeasibly paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated. Notwithstanding the foregoing:

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(a) Permitted Payments on Subordinated Note . So long as no “Default” or “Event of Default” (each as defined in the Loan Agreement or any other loan document evidencing Senior Indebtedness) has occurred and is continuing (or would result on a pro forma basis after giving effect to the then due payment on the Subordinated Note) and such payments were reflected in the business plan most recently delivered to the Senior Lender by the Borrower, Borrower may pay and the Subordinated Creditor may receive regularly scheduled quarterly payments of interest and principal (but not accelerated payments) when and as due under the Subordinated Note as in effect on the date hereof.

(b) Permitted Earn Out Payments . So long as no “Default” or “Event of Default” (each as defined in the Loan Agreement or any other loan document evidencing Senior Indebtedness) has occurred and is continuing (or would result on a pro forma basis after giving effect to the then due Earn Out Payment), and provided that the Loan Parties’ Chief Financial Officer has delivered to the Senior Lender a notice setting forth the Earn Out Payment then due under the Asset Purchase Agreement as in effect on the date hereof, and certifying that the Borrower is in compliance a pro forma basis after giving effect to such Earn Out Payment with the financial covenants set forth in Section 7.3 of the Loan Agreement and such Earn Out Payments were reflected in the business plan most recently delivered to the Senior Lender by the Borrower, Borrower may pay and the Subordinated Creditor may receive such Earn Out Payment.

2. No Right of Action . If an Event of Default occurs and is continuing under the Seller Note, the Subordinated Creditor may accelerate all or a portion of the Subordinated Indebtedness, but will not commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Indebtedness, or join with any creditor (unless the Senior Lender shall so join) in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the federal or any state government, unless and until the Senior Indebtedness has been indefeasibly paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated. The Subordinated Creditor will not obtain or otherwise acquire or accept any lien in any property or assets of the Loan Parties. The Subordinated Creditor will not commence any action or proceeding with respect to any property or assets of the Loan Parties, will not take possession of, sell, or dispose of any property or assets of the Loan Parties, and will not exercise or enforce any right or remedy available to the Subordinated Creditor with respect to any property or assets of the Loan Parties other than to accelerate all or a portion of the Subordinated Indebtedness, unless and until the Senior Indebtedness has been paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated.

Notwithstanding anything to the contrary contained in this Agreement, the Subordinated Creditor shall be permitted to commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Indebtedness, or join with any creditor in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the federal or any state government at any time following the two hundredth day (200 ^th ) day after the Subordinated Creditor has provided written notice of an Event of Default (as defined in the Seller Note) to the Loan Parties and the Senior Lender; provided that such Event of Default (as so defined) is continuing and has not been cured.

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3. No Security . The Subordinated Creditor warrants and represents that the Subordinated Indebtedness is unsecured and agrees that (i) the Subordinated Creditor hereafter will not accept any security of any kind for the Subordinated Indebtedness, and (ii) in the event the Subordinated Creditor does obtain any security for the Subordinated Indebtedness, the Subordinated Creditor shall execute and deliver to the Senior Lender, and hereby authorizes the Senior Lender to prepare and record, such termination statements and releases as the Senior Lender shall reasonably request or require to release the Subordinated Creditor’s security interest in or lien against such property. The Subordinated Creditor hereby agrees that any lien or security interest that it may now or hereafter have in any property in contravention of the preceding sentence is subject and subordinate, to the extent and in the manner provided herein, to any liens and security interests that the Senior Lender may now or hereafter have in such property to secure the Senior Indebtedness. The Subordinated Indebtedness shall continue to be subordinated to the Senior Indebtedness even if the Senior Indebtedness is deemed unsecured, under-secured, subordinated, avoided or disallowed under the United States Bankruptcy Code or other applicable law.

4. Subordinated Indebtedness Owed Only to Subordinated Creditor . The Subordinated Creditor warrants and represents that the Subordinated Creditor has not previously assigned any interest in the Subordinated Indebtedness, that no other entity or person owns an interest in the Subordinated Indebtedness (whether as joint holders of the Subordinated Indebtedness, participants or otherwise), and that all of the Subordinated Indebtedness is owing only to the Subordinated Creditor. The Subordinated Creditor further covenants that all of the Subordinated Indebtedness shall continue to be owing only to the Subordinated Creditor unless it is assigned to an entity or a person who agrees with the Senior Lender to be bound by the subordination provisions set forth herein.

5. Receipt of Prohibited Payments . If the Subordinated Creditor receives any payment in respect of the Subordinated Indebtedness that the Subordinated Creditor is not entitled to receive under the provisions of this Agreement and the Subordinated Creditor knows, or reasonably should have known that an Event of Default has occurred and is continuing, or receives written notice from Senior Lender of the same, the Subordinated Creditor will hold the amount so received in trust for the Senior Lender and will forthwith turn over such payment to the Senior Lender in the form received (except for the endorsement of the Subordinated Creditor where necessary) for application to then‑existing Senior Indebtedness (whether or not due), in such manner of application as the Senior Lender may deem appropriate. If the Subordinated Creditor exercises any right of setoff or takes any other action which the Subordinated Creditor is not permitted to exercise or take under the provisions of this Agreement, the Subordinated Creditor will promptly pay over to the Senior Lender, in immediately available funds, an amount equal to the amount of the claims or obligations so offset or an amount equal to any amount recovered from any such action, as applicable. If the Subordinated Creditor fails to make any endorsement required under this Agreement, the Senior Lender is hereby irrevocably appointed as the attorney‑in‑fact (which appointment is coupled with an interest) for the Subordinated Creditor to make such endorsement in the Subordinated Creditor’s name. The turnover of any prohibited payments by the Subordinated Creditor to the Senior Lender pursuant to this Section 5 shall not limit or restrict any other claims, actions, rights or remedies which the Senior Lender may have against the Subordinated Creditor as a result of the Subordinated Creditor’s exercising any right or taking any action which is not permitted under the terms of this Agreement.

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6. Continuing Nature of Subordination . This Agreement shall be effective and may not be terminated or otherwise revoked by the Subordinated Creditor until all of the Senior Indebtedness shall have been fully paid and discharged and all financing arrangements between the Loan Parties and the Senior Lender have been terminated. This Agreement shall constitute a continuing agreement of subordination, and the Senior Lender may, without notice to or consent by the Subordinated Creditor, modify any term of the Senior Indebtedness in reliance upon this Agreement.

7. Instrument Legend; No Amendments to Subordinated Indebtedness . Any instrument evidencing the Subordinated Indebtedness will be inscribed with a legend conspicuously indicating that payment thereof is subordinated to the claims of the Senior Lender pursuant to the terms of this Agreement. The Subordinated Creditor will not agree to any amendment, restatement or other modification of the Subordinated Note or of the Asset Purchase Agreement, without the prior written consent of the Senior Lender.

8. Binding Effect . This Agreement shall be binding upon the Creditors (and their respective successors and assigns), and shall inure to the benefit of the Senior Lender (and its successors and assigns).

9. Governing Law and Construction . The validity, construction and enforceability of this Agreement shall be governed by the internal laws of the state of Minnesota, without giving effect to the conflict of laws principles thereof.

10. Consent to Jurisdiction . THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE SUBORDINATED CREDITOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE SUBORDINATED CREDITOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SENIOR LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

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11. Waiver of Jury Trial . THE SUBORDINATED CREDITOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12. No Obligation to Provide Financial Accommodations . The Subordinated Creditor acknowledges and agrees that this Agreement is executed and delivered to the Senior Lender to induce the Senior Lender to make financial accommodations available to the Borrower, but this Agreement does not obligate the Senior Lender to make any financial accommodations available to the Borrower.

13. Counterparts . This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Agreement by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

(Signature page follows)

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THE UNDERSIGNED HAS EXECUTED this Subordination Agreement as of the date first above written.

	GOEDEKER TELEVISION CO., INC.
	By:	/s/ Stephen Goedeker
	Name:	Stephen Goedeker
	Its:	President
	Address for Notices :
	Steve Goedeker
	9013 Pilot
	St. Louis, MO 63123

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THE UNDERSIGNED HAS EXECUTED this Subordination Agreement as of the date first above written.

	BURNLEY CAPITAL LLC
	By:	/s/ Daniel O’Rourke
	Name:	Daniel O’Rourke
	Its:	Authorized Officer
	Address for Notices:
	212 3 rd Avenue N., Suite 505
	Minneapolis, MN 55401

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LOAN PARTIES’ ACKNOWLEDGMENT

The Loan Parties hereby acknowledge receipt of a copy of the foregoing Subordination Agreement, and agree to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof, and to do every other act and thing necessary or appropriate to carry out such terms and provisions.

	1847 GOEDKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Its:	Chief Financial Officer
	1847 GOEDEKER HOLDCO INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Its:	President

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EXHIBIT 10.5

SUBORDINATION AGREEMENT

(Respecting Seller Note and Earn Out Payments)

This Subordination Agreement (this “ Agreement ”) is made as of April 5, 2019, by and between Goedeker Television Co., Inc., a Missouri corporation (the “ Subordinated Creditor ”), and Small Business Community Capital L.P., a Delaware limited partnership (the “ Senior Lender ”). Each of the Subordinated Creditor and Senior Lender may be referred to herein as a “Creditor” or collectively as the “Creditors”.

RECITALS:

A. 1847 Goedeker Inc., a Delaware corporation (the “ Borrower ”), and 1847 Goedeker Holdco Inc. (“ Holdco ” and together with the Borrower, the “ Loan Parties ”) are now, or may hereafter be, indebted to Senior Lender as a result of extensions of credit under that certain Loan and Security Agreement, dated as of the date hereof, among the Loan Parties and the Senior Lender (as such agreement may be amended, modified, supplemented, replaced or refinanced from time to time, the “ Loan Agreement ”).

B. Borrower is indebted to Subordinated Creditor under that certain 9% Subordinated Promissory Note of even date herewith, a copy of which is attached hereto as Exhibit A (the “ Subordinated Note ”).

C. The Subordinated Creditor is entitled to receive from Borrower “Earn Out Payments” as such term is defined in the Asset Purchase Agreement (the “ Earn Out Payments ”), of even date herewith, a copy of which is attached hereto as Exhibit B (the “ Asset Purchase Agreement ”).

D. Subordinated Creditor and Senior Lender desire to agree to their respective rights, priorities and interests regarding each of their loans to Borrower, all as set forth herein.

AGREEMENTS:

IN CONSIDERATION of the foregoing premises, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinated Creditor and Senior Lender agree as follows:

1. Subordination . The payment of all amounts owed under the Subordinated Note and all Earn Out Payments (collectively, the “ Subordinated Indebtedness ”) is hereby subordinated to the payment in full of all indebtedness owed to the Senior Lender under the Loan Agreement and all other loan documents, whether now existing or hereafter incurred or created (the “ Senior Indebtedness ”), and no payments or other distributions whatsoever in respect of any Subordinated Indebtedness shall be made by the Loan Parties and no property or assets of the Loan Parties shall be applied to the purchase, redemption or other acquisition or retirement of any Subordinated Indebtedness, until the Senior Indebtedness shall have been indefeasibly paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated. Notwithstanding the foregoing:

 

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(a) Permitted Payments on Subordinated Note . So long as no “Default” or “Event of Default” (each as defined in the Loan Agreement or any other loan document evidencing Senior Indebtedness) has occurred and is continuing (or would result on a pro forma basis after giving effect to the then due payment on the Subordinated Note) and such payments were reflected in the business plan most recently delivered to the Senior Lender by the Borrower, Borrower may pay and the Subordinated Creditor may receive regularly scheduled quarterly payments of interest and principal (but not accelerated payments) when and as due under the Subordinated Note as in effect on the date hereof.

(b) Permitted Earn Out Payments . So long as no “Default” or “Event of Default” (each as defined in the Loan Agreement or any other loan document evidencing Senior Indebtedness) has occurred and is continuing (or would result on a pro forma basis after giving effect to the then due Earn Out Payment), and provided that the Loan Parties’ Chief Financial Officer has delivered to the Senior Lender a notice setting forth the Earn Out Payment then due under the Asset Purchase Agreement as in effect on the date hereof, and certifying that the Borrower is in compliance a pro forma basis after giving effect to such Earn Out Payment with the financial covenants set forth in Section 7.3 of the Loan Agreement and such Earn Out Payments were reflected in the business plan most recently delivered to the Senior Lender by the Borrower, Borrower may pay and the Subordinated Creditor may receive such Earn Out Payment.

2. No Right of Action . If an Event of Default occurs and is continuing under the Seller Note, the Subordinated Creditor may accelerate all or a portion of the Subordinated Indebtedness, but will not commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Indebtedness, or join with any creditor (unless the Senior Lender shall so join) in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the federal or any state government, unless and until the Senior Indebtedness has been indefeasibly paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated. The Subordinated Creditor will not obtain or otherwise acquire or accept any lien in any property or assets of the Loan Parties. The Subordinated Creditor will not commence any action or proceeding with respect to any property or assets of the Loan Parties, will not take possession of, sell, or dispose of any property or assets of the Loan Parties, and will not exercise or enforce any right or remedy available to the Subordinated Creditor with respect to any property or assets of the Loan Parties other than to accelerate all or a portion of the Subordinated Indebtedness, unless and until the Senior Indebtedness has been paid in full and all commitments of the Senior Lender to make loans and other credit accommodations to the Loan Parties have been terminated.

Notwithstanding anything to the contrary contained in this Agreement, the Subordinated Creditor shall be permitted to commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Indebtedness, or join with any creditor in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the federal or any state government at any time following the two hundredth day (200 ^th ) day after the Subordinated Creditor has provided written notice of an Event of Default (as defined in the Seller Note) to the Loan Parties and the Senior Lender; provided that such Event of Default (as so defined) is continuing and has not been cured.

 

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3. No Security . The Subordinated Creditor warrants and represents that the Subordinated Indebtedness is unsecured and agrees that (i) the Subordinated Creditor hereafter will not accept any security of any kind for the Subordinated Indebtedness, and (ii) in the event the Subordinated Creditor does obtain any security for the Subordinated Indebtedness, the Subordinated Creditor shall execute and deliver to the Senior Lender, and hereby authorizes the Senior Lender to prepare and record, such termination statements and releases as the Senior Lender shall reasonably request or require to release the Subordinated Creditor’s security interest in or lien against such property. The Subordinated Creditor hereby agrees that any lien or security interest that it may now or hereafter have in any property in contravention of the preceding sentence is subject and subordinate, to the extent and in the manner provided herein, to any liens and security interests that the Senior Lender may now or hereafter have in such property to secure the Senior Indebtedness. The Subordinated Indebtedness shall continue to be subordinated to the Senior Indebtedness even if the Senior Indebtedness is deemed unsecured, under-secured, subordinated, avoided or disallowed under the United States Bankruptcy Code or other applicable law.

4. Subordinated Indebtedness Owed Only to Subordinated Creditor . The Subordinated Creditor warrants and represents that the Subordinated Creditor has not previously assigned any interest in the Subordinated Indebtedness, that no other entity or person owns an interest in the Subordinated Indebtedness (whether as joint holders of the Subordinated Indebtedness, participants or otherwise), and that all of the Subordinated Indebtedness is owing only to the Subordinated Creditor. The Subordinated Creditor further covenants that all of the Subordinated Indebtedness shall continue to be owing only to the Subordinated Creditor unless it is assigned to an entity or a person who agrees with the Senior Lender to be bound by the subordination provisions set forth herein.

5. Receipt of Prohibited Payments . If the Subordinated Creditor receives any payment in respect of the Subordinated Indebtedness that the Subordinated Creditor is not entitled to receive under the provisions of this Agreement and the Subordinated Creditor knows, or reasonably should have known that an Event of Default has occurred and is continuing, or receives written notice from Senior Lender of the same, the Subordinated Creditor will hold the amount so received in trust for the Senior Lender and will forthwith turn over such payment to the Senior Lender in the form received (except for the endorsement of the Subordinated Creditor where necessary) for application to then‑existing Senior Indebtedness (whether or not due), in such manner of application as the Senior Lender may deem appropriate. If the Subordinated Creditor exercises any right of setoff or takes any other action which the Subordinated Creditor is not permitted to exercise or take under the provisions of this Agreement, the Subordinated Creditor will promptly pay over to the Senior Lender, in immediately available funds, an amount equal to the amount of the claims or obligations so offset or an amount equal to any amount recovered from any such action, as applicable. If the Subordinated Creditor fails to make any endorsement required under this Agreement, the Senior Lender is hereby irrevocably appointed as the attorney‑in‑fact (which appointment is coupled with an interest) for the Subordinated Creditor to make such endorsement in the Subordinated Creditor’s name. The turnover of any prohibited payments by the Subordinated Creditor to the Senior Lender pursuant to this Section 5 shall not limit or restrict any other claims, actions, rights or remedies which the Senior Lender may have against the Subordinated Creditor as a result of the Subordinated Creditor’s exercising any right or taking any action which is not permitted under the terms of this Agreement.

 

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6. Continuing Nature of Subordination . This Agreement shall be effective and may not be terminated or otherwise revoked by the Subordinated Creditor until all of the Senior Indebtedness shall have been fully paid and discharged and all financing arrangements between the Loan Parties and the Senior Lender have been terminated. This Agreement shall constitute a continuing agreement of subordination, and the Senior Lender may, without notice to or consent by the Subordinated Creditor, modify any term of the Senior Indebtedness in reliance upon this Agreement.

7. Instrument Legend; No Amendments to Subordinated Indebtedness . Any instrument evidencing the Subordinated Indebtedness will be inscribed with a legend conspicuously indicating that payment thereof is subordinated to the claims of the Senior Lender pursuant to the terms of this Agreement. The Subordinated Creditor will not agree to any amendment, restatement or other modification of the Subordinated Note or of the Asset Purchase Agreement, without the prior written consent of the Senior Lender.

8. Binding Effect . This Agreement shall be binding upon the Creditors (and their respective successors and assigns), and shall inure to the benefit of the Senior Lender (and its successors and assigns).

9. Governing Law and Construction . The validity, construction and enforceability of this Agreement shall be governed by the internal laws of the state of New York, without giving effect to the conflict of laws principles thereof.

10. Consent to Jurisdiction . THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK; AND THE SUBORDINATED CREDITOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE SUBORDINATED CREDITOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SENIOR LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. NOTWITHSTANDING THE FOREGOING, PRIOR TO THE DATE THAT THE INDEBTEDNESS OF THE BORROWER IN FAVOR OF BURNLEY CAPITAL LLC ARISING UNDER THAT CERTAIN LOAN AND SECURITY AGREEMENT, DATED AS OF THE DATE HEREOF, IS INDEFEASABLY PAID IN FULL, THIS AGREEMENT SHALL BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE SUBORDINATED CREDITOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT .

 

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11. Waiver of Jury Trial . THE SUBORDINATED CREDITOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12. No Obligation to Provide Financial Accommodations . The Subordinated Creditor acknowledges and agrees that this Agreement is executed and delivered to the Senior Lender to induce the Senior Lender to make financial accommodations available to the Borrower, but this Agreement does not obligate the Senior Lender to make any financial accommodations available to the Borrower.

13. Counterparts . This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Agreement by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

(Signature page follows)

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THE UNDERSIGNED HAS EXECUTED this Subordination Agreement as of the date first above written.

	GOEDEKER TELEVISION CO., INC.
	By:	/s/ Stephen Goedeker
	Name:	Stephen Goedeker
	Its:	President
	Address for Notices:
	9013 Pilot
	St. Louis, MO 63123

 

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THE UNDERSIGNED HAS EXECUTED this Subordination Agreement as of the date first above written.

	SMALL BUSINESS COMMUNITY CAPITAL L.P.
	By:	/s/ Crandall P. Deery
	Name:	Crandall P. Deery
	Its:	Partner
	Address for Notices:
	Small Business Community Capital II, L.P.
	9W Broad Street, Stamford CT 06902
	Attention: Crandall P. Deery

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LOAN PARTIES’ ACKNOWLEDGMENT

The Loan Parties hereby acknowledge receipt of a copy of the foregoing Subordination Agreement, and agree to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof, and to do every other act and thing necessary or appropriate to carry out such terms and provisions.

	1847 GOEDKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Its:	Chief Financial Officer
	1847 GOEDEKER HOLDCO INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Its:	President

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EXHIBIT 10.6

LEASE AGREEMENT

This Lease Agreement (“ Lease ”) is entered into by and between the undersigned Landlord and Tenant on this the 5th day of April, 2019, in accordance with the terms and conditions hereinafter set forth.

ARTICLE 1. BASIC PROVISIONS AND CERTAIN DEFINED LEASE TERMS

1.1 When used herein, the following terms shall have the indicated meanings:

	A.	Landlord : S.H.J., L.L.C.
		Address of Landlord: 120 S. Central Ave. Suite 1800, St. Louis, MO 63105
	B.	Tenant : 1847 Goedeker Inc.
		Address of Tenant: 13850 Manchester Road, St. Louis, MO 63011
	C.	Leased Premises : Land and improvements located thereon located in the County of St. Louis and commonly known as 13850 Manchester Rd., St. Louis, Missouri 63011, which is more particularly described and/or depicted in Exhibit “A” attached hereto and incorporated herein by reference.
	D.	Lease Term : Beginning on the Commencement Date and expiring on the Termination Date.
	E.	Commencement Date : April 5, 2019.
	F.	Termination Date : Five years after commencement date unless otherwise terminated as permitted herein.
	G.	Lease Year : A period of twelve (12) consecutive calendar months beginning on the Commencement Date.
	H.	Rent :
		Base Rent : $540,000 per year ($45,000 per month)
		Additional Rent :

 

	(1)	Initial Tax Payment $8,617.50 to be adjusted according to Article 4.
	(2)	Initial Insurance Payment : $1,726 to be adjusted according to Article 4.

	I.	Security Deposit : $45,000.
	J.	Permitted Use : Operation of appliance store together with related existing display, warehouse, and office use.
	K.	Parking : Tenant shall be permitted the non-exclusive use of the parking lot located on the Leased Premises, in compliance with all laws and any reasonable rules and regulations of Landlord.

 

1.2 Each of the foregoing Basic Provisions and Certain Defined Lease Terms shall be construed in conjunction with the references thereto contained in the other provisions of this Lease and shall be limited by such other provisions. Each reference in this Lease to any of the foregoing Basic Provisions and Certain Defined Lease Terms shall be construed to incorporate each term set forth above.

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ARTICLE 2. GRANTING CLAUSE

2.1 In consideration of the obligation of Tenant to pay Rent as herein provided and in consideration of the other terms, covenants and conditions hereof, Landlord hereby leases to Tenant, and Tenant hereby takes from Landlord the Leased Premises for the Lease Term, unless sooner terminated in accordance with the terms and conditions set forth below.

2.2 EXCEPT AS SPECIFICALLY PROVIDED IN THIS LEASE, TENANT ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES TO TENANT AS TO THE CONDITION OF THE LEASED PREMISES, EITHER EXPRESS OR IMPLIED, THAT THE LEASED PREMISES ARE BEING LEASED TO TENANT “AS IS”, “WHERE IS” AND “WITH ALL FAULTS” AND LANDLORD EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, MARKETABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 3. ACCEPTANCE OF LEASED PREMISES

Tenant acknowledges that (a) it has inspected and accepts the Leased Premises, (b) the buildings and improvements comprising the Leased Premises are suitable for the purposes for which they are being leased by Tenant, (c) the Leased Premises are in good and satisfactory condition, and (d) no representation as to the repair of the Leased Premises, nor promises to alter, remodel, or improve the Leased Premises have been made by Landlord, except as expressly set forth herein.

ARTICLE 4. RENT, ADDITIONAL RENT, AND SECURITY DEPOSIT

4.1 Rent shall accrue hereunder from the Commencement Date as set forth in the Basic Provisions and shall be payable at the address of Landlord specified above or such other place as Landlord shall designate in writing to Tenant, from time to time.

4.2 Tenant shall pay to Landlord the Rent in monthly installments in the amounts specified in Section 1.1, without demand, deduction, or setoff, on or before the first day of each calendar month during the Lease Term; provided, that if the Commencement Date should fall on a date other than the first day of a calendar month, there shall be due and payable, a pro-rata portion of the Rent.

4.3 In addition to and separate from the Base Rent, Tenant will be responsible for all Taxes and Insurance Premiums (as such terms are defined below) during the Lease Term and Tenant will pay to Landlord the Tax Payment and the Insurance Payment (collectively, together with any other charges due hereunder by Tenant other than Base Rent being referred to herein as “ Additional Rent ”) as more particularly described below. Beginning on the Commencement Date, the Tax Payment and the Insurance Payment shall be payable monthly in advance for each and every month thereafter during the Lease Term; except, however, if the Lease Term does not begin on the first day of a calendar month, Tenant shall pay a pro-rata portion of such sums for such partial month. As used herein, the following terms shall have the following meanings:

	A.	The term “ Taxes ” shall mean, all taxes, assessments, special assessments, impositions, levies, charges, excises, fees, licenses and other sums levied, assessed, charged or imposed by any governmental authority or other taxing authority or which accrue on the Leased Premises for each calendar year (or portion thereof) during the Lease Term and all penalties, interest and other charges (with respect to Taxes) payable by reason of any delay in or failure or refusal of Tenant to make timely payment as required under this Lease.
	B.	The term “ Insurance Premiums ” shall mean, the total annual insurance premiums which accrue on all fire and extended coverage insurance, boiler insurance, public liability and property damage insurance, rent insurance and other insurance which, from time to time, may at Landlord’s election be carried by Landlord with respect to the Leased Premises during any applicable calendar year (or portion thereof) occurring during the Lease Term.

 

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4.4 The initial monthly Tax Payment and Insurance Payment set forth in the Basic Provisions are based upon Landlord’s estimated amounts of the Taxes and Insurance Premiums for the first Lease Year, and may be increased or decreased from time to time on notice to Tenant to reflect the then current projected costs of such expenses. Landlord shall total all expenses annually, and reconcile the actual amount of such expenses against Tenant’s total payments. If Tenant’s total payments are less than the actual amount of such expenses, Tenant shall pay the difference to Landlord within five (5) days after demand. If the total payments of Tenant are more than the actual amount of such expenses, Landlord shall retain such excess and credit it against Tenant’s future liabilities for such expenses.

4.5 If there is presently in effect or hereafter adopted any nature of sales tax or use tax or other tax on rents or other sums received by Landlord under this Lease (herein referred to as “ Rent Sales Tax ”), then in addition to all Rent and other payments to be made by tenant as provided above, Tenant will also pay Landlord a sum equal to the amount of such Rent Sales Tax. The term “Rent Sales Tax” shall not include any income taxes applicable to Landlord.

4.6 Tenant agrees to deposit with Landlord on the date hereof the Security Deposit which shall be held by Landlord, without obligation for interest, as security for the performance of Tenant’s obligations under this Lease. It being understood and agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of an Event of Default, Landlord may use all or part of the Security Deposit to pay past due Rent or other payments due Landlord under this Lease, and the cost of any other damage, injury, expense or liability caused by such Event of Default without prejudice to any other remedy provided herein or provided by law. On demand, Tenant shall pay Landlord the amount that will restore the Security Deposit to its original amount. If Tenant is not then in default hereunder, any remaining balance of the Security Deposit shall be returned by Landlord to Tenant after termination of this Lease.

ARTICLE 5. USE OF LEASED PREMISES

5.1 The Leased Premises shall be used only for the Permitted Use. Tenant shall at its own cost and expense obtain any and all licenses and permits necessary for any such use. Tenant shall, at its own cost and expense, comply with all laws, orders, and requirements of all governmental entities with reference to the use and occupancy of the Leased Premises. Tenant shall take care of the Leased Premises and not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the Leased Premises and not take any other action which would constitute a nuisance. Without Landlord’s prior written consent, Tenant shall not receive, store or otherwise handle any product, material, or substance which is explosive, highly inflammable or hazardous waste. Tenant will not permit the Leased Premises to be used for any purpose or in any manner (including without limitation any method of storage) which would render any insurance thereon void or the insurance risk more hazardous.

 

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ARTICLE 6. MAINTENANCE AND REPAIR OF LEASED PREMISES AND ALTERATIONS

6.1 Landlord shall be responsible for maintaining the structural soundness of the foundation, exterior walls (except plate glass, windows, doors, door closure devises, window and door frames, molding, locks and hardware, and interior painting or other interior treatments of exterior walls). Tenant shall be responsible for and shall keep all other components of the Leased premises in good order and repair. Landlord shall not be required to make any repairs occasioned by an act of negligence or willful misconduct by Tenant, its employees, subtenants, licensees, or concessionaires. In the event that the Leased Premises should become in need of repairs required to be made by Landlord, Tenant shall give immediate notice thereof to Landlord, and Landlord shall proceed with reasonable diligence to make such repairs. Landlord’s obligation to maintain the aforementioned items shall be limited solely to the cost of such repairs or maintenance or the curing of any defect in the same.

6.2 Landlord reserves the right to alter or modify the building of which the Leased Premises are a part when such alterations or modifications are required by governmental laws, codes, ordinances, regulations, or any other applicable authorities, including, without limitation, the Americans with Disabilities Act of 1990, as subsequently amended or modified (the “ ADA ”). If any such modification is predicated by Tenant’s particular use of the Leased Premises the cost shall be borne entirely by Tenant and Tenant shall reimburse Landlord for same promptly upon demand.

6.3 Except for repairs and replacement required to be made by Landlord under the provisions of this Article 6 and Article 12 (Damage by Casualty), Tenant shall keep the Leased Premises in a good and clean condition, ordinary wear and tear excepted, and shall at its sole cost and expense make all needed repairs and replacements, including cracked or broken glass, any special store front, windows, doors, heating system, plumbing work, pipes and fixtures, air-conditioning equipment, roof and the interior of the Leased Premises generally and other improvements of the Tenant outside the Leased Premises, if any, together with such repairs, replacements and alterations required by any governmental authority in connection with Tenant’s use and operation of the Leased Premises. In addition, Tenant shall be responsible for maintaining in a good, neat and clean condition, reasonable wear and tear excepted, all parking, driveway and landscaped areas located at the Leased Premises. If any repairs required to be made by Tenant hereunder are not initiated and pursued diligently within ten (10) days after notice is delivered to Tenant by Landlord, Landlord may at its option make such repairs, and Tenant shall pay to Landlord upon demand the reasonable cost of such repairs. Landlord agrees to afford to Tenant the benefit of any guaranties or warranties of third parties which may be applicable to air-conditioning equipment and other machinery and equipment installed by Landlord in the Leased Premises, without recourse upon Landlord.

6.4 Tenant, at its own cost and expense, shall enter into a regularly scheduled preventative maintenance/service contract with a maintenance contractor approved by Landlord for servicing all hot water, heating and air conditioning systems and equipment within the Leased Premises. The service contract must include all services suggested by the equipment manufacturer in its operations/maintenance manual and must become effective and a copy thereof delivered to Landlord within fifteen (15) days of the date Tenant takes possession of the Leased Premises.

6.5 Tenant shall not make any openings in the roof or exterior walls, nor make any alterations, additions, or improvements to the Leased Premises without the prior written consent of Landlord except for the installation of unattached, removable trade fixtures which may be installed without drilling, cutting or otherwise defacing the Leased Premises. All alterations, additions, improvements and fixtures (other than unattached, movable trade fixtures of Tenant as permitted herein) upon the Leased Premises, including, but not limited to, the HVAC system, pipes, paneling or other wall covering, any linoleum or other floor covering of similar character which may be cemented or otherwise adhesively affixed to the floor of the Leased Premises, shall remain upon and be surrendered with the Leased Premises and become the property of Landlord at the expiration or earlier termination of this Lease, all without credit or compensation to Tenant, unless Landlord requests their removal, in which event Tenant shall remove the same and restore the Leased Premises to its original condition at Tenant’s sole cost and expense. In addition, Tenant shall put all plumbing or other electrical wiring connections exposed as result of the removal of Tenant’s removable trade fixtures in a safe and workmanlike manner. Tenant’s obligations under this paragraph shall survive the expiration or earlier termination of this Lease

 

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6.6 All construction work done by Tenant within the Leased Premises shall be performed in a good and workmanlike manner, and in compliance with all governmental requirements and applicable law. Without limitation on the generality of the foregoing, Landlord shall have the right to require that such work be performed in accordance with rules and regulations which Landlord may from time to time reasonably prescribe. All costs of such work shall be paid promptly so as to prevent the assertion of any liens for labor or materials. Tenant agrees to indemnify Landlord and hold Landlord harmless against any loss, liability, damage or injury resulting from such work, which indemnity shall survive the expiration or earlier termination of this Lease, and Tenant shall, if requested by Landlord, furnish a reasonable bond or other security satisfactory to Landlord against any such loss, liability, damage or injury. Whenever Tenant proposes to do any construction work within the Leased Premises, it shall first furnish to Landlord plans and specifications in such detail as Landlord may request covering all such work. In no event shall any construction work be commenced within the Leased Premises without Landlord’s written approval of such plans and specifications.

ARTICLE 7. LANDLORD’S RIGHT OF ACCESS

7.1 Landlord and its employees, contractors, agents and representatives shall have the right to enter upon the Leased Premises during normal business hours (or at time for emergency reasons) and with at least twenty-four hours’ notice (unless for emergency reasons in which case no notice is required), for the purpose of inspecting the same, or of making repairs or additions to the Leased Premises, or of showing the Leased Premises to prospective purchasers, tenants or lenders. In an emergency, Landlord (or its agents, representatives or employees) may use any means to open any door into or in the Leased Premises without any liability therefor.

ARTICLE 8. SIGNS AND ROOF

8.1 Tenant shall have the right, at Tenant’s sole cost and expense, to install signage at the Premises, subject to and in compliance with any and all applicable laws and governmental requirements and shall be responsible for obtaining any necessary governmental permits or applications therefor. On or before the expiration or earlier termination of this Lease, Tenant shall remove all of Tenant’s signage and restore the Leased Premises to the condition which existed prior to the installation of such signs including, without limitation, any discoloration caused by such installation and/or removal. This obligation of Tenant shall survive the expiration or earlier termination of this Lease. Use of the roof is reserved to the Landlord, provided such use does not unreasonably interfere with Tenant’s occupancy.

ARTICLE 9. UTILITIES AND LIENS

9.1 Tenant shall contract in its own name for all water, gas, electricity, telephone service, sewage services, garbage services, and other utilities used in or upon the Leased Premises during the Lease Term (the “ Utility Services ”), and Tenant shall pay or cause to be paid when due all charges for the Utility Services. Tenant shall be liable for all maintenance and equipment with respect to the continued operation of Utility Services serving the Leased Premises during the Lease Term. Tenant agrees to indemnify and hold harmless Landlord from and against any and all claims arising from the maintenance of the Utility Services and from all costs and charges for the Utility Services provided to and consumed on the Leased Premises during the Lease Term. In the event any Utility Services are delayed, interrupted or discontinued, whether by reason of repairs, strikes, accidents, inability to obtain fuel or supplies, or other causes, no such interruption or discontinuance of such service shall be deemed an eviction, partial eviction or disturbance of Tenant’s use and possession of the Leased Premises or any part thereof, or render the Landlord liable to Tenant for any damages, or relieve Tenant from performance of Tenant’s obligations under this Lease including without limitation the obligation to pay Rent.

 

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9.2 Tenant shall not mortgage or otherwise encumber or allow to be encumbered its interest herein without obtaining the prior written consent of Landlord. Should Tenant cause any mortgage, lien or other encumbrance (hereinafter singularly or collectively referred to as “ Encumbrance ”) to be filed, against the Leased Premises, Tenant shall dismiss or bond against the same within thirty (30) days after the filing thereof. If Tenant fails to remove or bond against said Encumbrance within said thirty (30) days, Landlord shall have the absolute right to remove said Encumbrance by whatever measures Landlord shall deem convenient including, without limitation, payment of such Encumbrance, in which event Tenant shall reimburse Landlord, as Additional Rent, all costs expended by Landlord, including reasonable attorneys fees, in removing said Encumbrance. All of the aforesaid rights of Landlord shall be in addition to any remedies which either Landlord or Tenant may have available to them at law or in equity.

9.3 Tenant's obligations under this Article 9 shall survive the expiration or earlier termination of this Lease.

ARTICLE 10. INSURANCE AND INDEMNITY

10.1 Tenant shall maintain in full force and effect throughout the Lease Term the following insurance policies: (a) commercial general liability insurance in amounts of not less than a per occurrence limit of $1,000,000, and with not less than a $2,000,000 general aggregate insuring Tenant, and as additional insureds, Landlord, if any, against all liability or injury to or death of persons, or damage to property, arising from or related to the use and/or occupancy of the Leased Premises by Tenant or any of Tenant’s agents, employees, contractors or invitees; (b) contractual liability insurance coverage sufficient to cover Tenant’s indemnity obligations under the Lease; (c) all-risk property insurance covering the full replacement value of all personal property of Tenant located within the Leased Premises including, without limitation, Tenant’s equipment, inventory, trade fixtures and supplies; (d) worker’s compensation insurance in statutory form and amounts; and (e) business interruption insurance. All insurance deductibles under Tenant’s insurance coverages shall be the sole responsibility of Tenant without right of reimbursement from Landlord for any reason. Tenant’s insurance shall be primary and non-contributing with or in excess of any insurance coverage carried by Landlord. Prior to taking occupancy, Tenant shall furnish evidence satisfactory to Landlord of the maintenance of all insurance coverages required hereunder; and Tenant shall obtain a written obligation on the part of each insurance company or insurance broker to notify Landlord at least thirty (30) days before cancellation or a material change of any such insurance. Failure of Landlord to demand any insurance certificate or other evidence with these insurance requirements, or failure of Landlord to identify a deficiency from evidence that is provided by Tenant to Landlord, shall not be construed as a waiver of Tenant’s obligation to maintain such coverage.

10.2 Landlord and Tenant waive all claims, rights of recovery and causes of action that either party or any party claiming by, through or under such party may now or hereafter have by subrogation or otherwise against the other party or against any of the other party’s officers, directors, shareholders, partners or employees for any loss or damage that may occur to the Leased Premises, Tenant’s improvements or any of the contents of any of the foregoing by reason of fire or other casualty, or by reason of any other cause except gross negligence or willful misconduct (thus including simple negligence of the parties hereto or their officers, directors, shareholders, partners or employees), that was insured against under the terms of any all risk or fire or extended coverage insurance policies maintained hereunder; provided, however, that the waiver set forth in this Paragraph shall be ineffective against any insurer of Landlord or Tenant to the extent that the waiver is prohibited by the laws or insurance regulations of the state in which the Leased Premises is located or would invalidate any insurance coverage of Landlord or Tenant. Landlord and Tenant hereby agree to cause (if available) an endorsement to be issued to their respective insurance policies recognizing this waiver of subrogation

 

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10.3 Except as specifically provided below, Tenant assumes liability for, and agrees to defend, indemnify, protect and hold harmless Landlord, its successors, assigns, affiliates, directors, shareholders, partners, contractors, employees and agents (all of the prior parties individually and collectively, the “ Landlord’s Related Parties ”) from and against, all liabilities, obligations, fines, demands, judgments, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including court costs and reasonable attorneys’ fees) of every kind or character (a) arising from any breach, violation or non-performance of any term, provision, covenant, agreement or condition on the part of Tenant hereunder, (b) recovered from or asserted against any of the Landlord’s Related Parties on account of injury or damage to person or property to the extent that any such damage or injury may be incident to, arise out of or be caused, by any act, omission, negligence or misconduct on the part of Tenant or any of its agents, servants, employees, contractors, or invitees or of any other person entering upon the Leased Premises under or with the express or implied invitation or permission of Tenant, or (c) arising from or arising out of the occupancy or use by Tenant, its agents, servants, employees, contractors or invitees of the Leased Premises or arising from or out of any event, circumstance, or occurrence within the Leased Premises, howsoever caused. Such indemnification of any of the Landlord’s Related Parties by Tenant shall be effective except to the extent such damage results from the gross negligence or willful misconduct of Landlord or any of its duly authorized agents or employees. Tenant’s indemnity obligations under this Paragraph shall survive the expiration or earlier termination of this Lease. The indemnification provided by this Article is subject to the Landlord’s waiver of recovery specified above, to the extent of Landlord’s recovery of loss proceeds under policies of insurance described above.

ARTICLE 11. NON-LIABILITY FOR CERTAIN DAMAGES

11.1 Except as specifically provided herein, Landlord and Landlord’s Related Parties shall have no responsibility or liability to Tenant, or to Tenant’s officers, directors, shareholders, partners, employees, agents, contractors or invitees, and Tenant hereby waives and releases any claims against Landlord and Landlord’s Related Parties for all bodily injury, death, property damage, business interruption, loss of profits, loss of trade secrets or other direct, consequential or special damages, including but not limited to (a) force majeure, (b) vandalism, theft, burglary, robbery, rape, murder, assault and other criminal acts (other than those committed by Landlord and its employees), (c) water leakage, the backing up of drains or flooding, or (d) the repair, replacement, maintenance, damage, or destruction of the Leased Premises.

11.2 Any and all security of any kind for Tenant, Tenant’s agents, employees or invitees, the Leased Premises, or any personal property thereon (including, without limitation, any personal property of any sublessee) shall be the sole responsibility and obligation of Tenant, and shall be provided by Tenant at Tenant’s sole cost and expense. Tenant acknowledges and agrees that the Landlord shall have no obligation or liability whatsoever with respect to the same.

ARTICLE 12. DAMAGE BY CASUALTY

12.1 Tenant shall give prompt notice to Landlord of any damage caused to the Leased Premises by fire or other casualty.

 

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12.2 In the event (a) the Leased Premises are totally destroyed, (b) the Leased Premises are partially destroyed but in Landlord’s reasonable opinion, cannot be restored to an economically viable and quality project, (c) the insurance proceeds payable to Landlord as result of such fire or casualty are, in Landlord’s reasonable opinion, inadequate to restore the portion remaining to an economically viable and quality project, or (d) less than 12 full calendar months remain in the Lease Term, Landlord may, at its election exercisable by the giving of notice to Tenant within sixty (60) days after the fire or casualty, terminate this Lease as of the date of such fire or casualty. Landlord shall notify Tenant within sixty (60) days after such damage as to the amount of time Landlord reasonably estimates it will take to restore the Leased Premises. If the restoration time is estimated to exceed 6 months, Tenant may elect to terminate this Lease by giving notice to Landlord no later than thirty (30) days after Landlord’s notice. If this Lease is not terminated as a result of fire or casualty, Landlord shall restore the Leased Premises to substantially the condition in which the same existed prior to the fire or casualty. Landlord’s obligation to rebuild and repair shall in any event be limited to restoring the Leased Premises to substantially the condition in which the same existed prior to such casualty, exclusive of any alterations, additions, improvements, fixtures or equipment installed by Tenant. Tenant agrees that promptly after completion of such work by Landlord, Tenant will proceed with reasonable diligence and at Tenant’s sole cost and expense, to restore, repair and replace all alterations, additions, improvements, fixtures, signs and equipment installed by Tenant. Tenant shall, subject to delays arising from the collection of insurance proceeds or from Force Majeure events, promptly re-enter the Leased Premises and commence doing business in accordance with this Lease. During the period of restoration by Landlord, Rent shall be abated to the extent that the Leased Premises are rendered untenable.

12.3 Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by mortgage or deed of trust covering the Leased Premises requires that the insurance proceeds be applied to such indebtedness, Landlord shall have the right to terminate this Lease by delivering notice of termination to Tenant within thirty (30) days after such requirement is made known by any such holder, whereupon all rights and obligations under this Lease, except those that expressly survive termination, shall cease and terminate.

ARTICLE 13. CONDEMNATION

13.1 If during the Lease Term, an authority with the power of eminent domain condemns all of the Leased Premises, then this Lease shall terminate on the date such authority takes possession of the Leased Premises. If less than all the Leased Premises is condemned, then Tenant shall have the right to terminate this Lease if such portion of the improvements on the Leased Premises should be condemned in such a manner that the balance of the Leased Premises is not fit for the continued use by Tenant for the Permitted Use. Tenant shall exercise the termination rights of this Paragraph no later than thirty (30) days after the condemning authority takes possession of the portion of the Leased Premises. Immediately upon the taking of possession of the portion of the Leased Premises taken by the condemning authority, if this Lease is not terminated, the Rent shall be reduced to such extent as may be fair and reasonable under the circumstances, as reasonably determined by the parties.

13.2 Upon receipt of the condemnation funds from the condemning authority, in the event Tenant does not elect to terminate this Lease pursuant to the above Paragraph, Landlord shall restore the Leased Premises remaining after the taking to substantially the same condition to which they existed prior to the taking. Any such restoration work shall be performed within a reasonable time period, done diligently and continually until completed. The Landlord’s obligation to rebuild and repair shall in any event be limited to restoring the Leased Premises to substantially the condition in which the same existed prior to such condemnation, exclusive of alterations, additions, improvements, fixtures or equipment installed by Tenant. Tenant shall, subject to delays arising from the collection of condemnation proceeds or from Force Majeure events, promptly re-enter the Leased Premises and commence doing business in accordance with this Lease.

 

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13.3 Any restoration work by Landlord on the Leased Premises performed under Article 12 or this Article 13 shall not constitute an eviction or disturbance of Tenant’s use or possession of the Leased Premises or a breach by Landlord of any of its obligations under this Lease or render Landlord liable for damages or entitle Tenant to be relieved from any of its obligations under this Lease (with the exception of a proportionate reduction in Rent) or grant Tenant any right of off-set or recoupment.

13.4 All sums awarded or agreed upon between Landlord and the condemning authority for the taking of the fee and any and all improvements thereon, whether as damages or as compensation, will be the property of Landlord. All sums awarded or agreed upon between Tenant and the condemning authority for the taking of Tenant’s leasehold interest in the Leased Premises and Tenant’s removable trade fixtures, if any, and Tenant’s moving and relocation expenses, if any, will be the property of Tenant, and Tenant hereby assigns to Landlord all other proceeds awarded for the condemnation of the Leased Premises.

ARTICLE 14. ASSIGNMENT AND SUBLETTING

14.1 Tenant shall not assign this Lease nor sublet all or any part of the Leased Premises without the prior written consent of Landlord. Any attempted assignment, subletting, transfer or encumbrance by Tenant in violation of this Paragraph shall be void. Upon the occurrence of an Event of Default (as defined below), if all or any part of the Leased Premises are then sublet, Landlord, in addition to any other remedies provided by this Lease or provided by law, may, at its option, collect directly from the subtenant all Rent becoming due to the Tenant by reason of the subletting.

Notwithstanding the foregoing, Tenant may, without Landlord's consent, (i) assign this Lease in connection with a sale of all or substantially all of its assets or all or substantially all of its assets relating to the business conducted by Tenant on the Premises; or (ii) mortgage or otherwise pledge its leasehold interest in this Lease to its current or future lender(s) (and such mortgagee or pledgee may, without Landlord’s consent, foreclose on or otherwise transfer their interest or title herein, or have Tenant transfer its interest or title herein in lieu of foreclosure or similar proceedings, to a successor mortgagee or pledgee or a third-party purchaser).

Notwithstanding any subletting, mortgaging, or assignment by Tenant or any collection of sums by Landlord from any assignee or subtenant, or for any other action or reason whatsoever, Tenant shall remain fully liable for the performance of all covenants in this Lease to be performed by the “tenant” during the Lease Term.

14.2 Landlord shall have the right to transfer, assign, or encumber in whole or in part, its rights and obligations in the Leased Premises or this Lease, or any portion thereof. In the event of the transfer and assignment by Landlord of its interest in this Lease to a person expressly assuming the Landlord’s obligations under this Lease, Landlord shall thereby be released from any further responsibility hereunder, and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such obligations.

ARTICLE 15. PROPERTY TAXES AND ASSESSMENTS

Tenant shall be liable for all real estate and personal property taxes levied or assessed against the Leased Premises and any personal property or fixtures placed in the Leased Premises. If any such taxes are levied or assessed against Landlord or Landlord’s property and (a) Landlord pays the same, or (b) the assessed value of Landlord’s property is increased by inclusion of such personal property and fixtures and Landlord pays the increased taxes, then, upon demand, Tenant shall pay to Landlord such taxes. Tenant’s obligation shall survive the expiration or earlier termination of this Lease.

 

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ARTICLE 16. DEFAULTS AND REMEDIES

16.1 Each of the following events shall be deemed to be an “ Event of Default ” by Tenant under this Lease:

16.2 Upon the occurrence of any Event of Default, Landlord shall have the option to pursue any one or more of the following remedies in addition to all other rights, remedies and recourses afforded Landlord hereunder or by law or equity, without any notice or demand whatsoever, except as may be specifically provided herein:

16.3 Upon any such Event of Default, Tenant shall immediately upon demand surrender the Leased Premises to Landlord, and if Tenant fails so to do, Landlord, without waiving any other remedy it may have, may enter upon and take possession of the Leased Premises and expel or remove Tenant and any other person who may be occupying such Leased Premises or any part thereof using whatever legal means available to Landlord. Pursuit of any remedy herein provided shall not constitute a forfeiture or violation of any of the terms, provisions and covenants herein contained. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such default.

16.4 If Landlord terminates this Lease, at Landlord’s option, Tenant shall be liable for and shall pay to Landlord, the sum of all Rent and other payments owed to Landlord hereunder accrued to the date of such termination, plus, as liquidated damages, an amount equal to (a) the present value (using the current “prime” interest rate quoted in the Wall Street Journal, or should such index no longer exist, a comparable index) of the total Rent and other payments owed hereunder for the remaining portion of the Lease Term, calculated as if the Lease Term expired on the date set forth in Section 1.1, (b) less the then fair market rental of the Leased Premises for such period, similarly discounted. Tenant’s obligations under this Paragraph shall survive the expiration or earlier termination of this Lease.

 

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16.5 If Landlord repossesses the Leased Premises without terminating the Lease, Tenant, at Landlord’s option, shall be liable for and shall pay Landlord on demand all Rent and other payments owed to Landlord hereunder, accrued to the date of such repossession, plus all amounts required to be paid by Tenant to Landlord until the date of expiration of the Lease Term as stated in Section 1.1, diminished by all amounts received by Landlord through reletting of the Leased Premises during such remaining term (but only to the extent of the Rent herein reserved). Actions to collect amounts due by Tenant to Landlord under this Paragraph may be brought from time to time, on one or more occasions, without the necessity of Landlord’s waiting until expiration of the Lease Term. Tenant’s obligations under this Paragraph shall survive the expiration or earlier termination of this Lease.

16.6 If Landlord repossesses the Leased Premises pursuant to the authority herein granted, then Landlord shall have the right to (i) keep in place and use, or (ii) remove and store, all of the furniture, fixtures and equipment at the Leased Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by any lessor thereof or third party having a lien thereon. Landlord also shall have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person (“ Claimant ”) who presents to Landlord a copy of any instrument represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity or legality of such instrument.

16.7 Upon termination of this Lease or upon termination of Tenant’s right to possession of the Leased Premises, Landlord may, but shall not be obligated to, attempt to relet the Leased Premises. If Landlord does elect to relet, Landlord may relet such portion of the Leased Premises, for such period, to such tenant, and for such use and purpose as Landlord, in the exercise of its reasonable discretion, may choose. Tenant shall not be entitled to the excess of any rent obtained by reletting over the Rent herein reserved.

16.8 The rights, remedies and recourses of Landlord for an Event of Default shall be cumulative and no right, remedy or recourse of Landlord, whether exercised by Landlord or not, shall be deemed to be in exclusion of any other.

16.9 Provisions of this Lease may not be waived orally or impliedly, but only by the party entitled to the benefit of the provision evidencing the waiver in writing. Thus, neither the acceptance of Rent by Landlord following an Event of Default (whether known to Landlord or not), nor any other custom or practice followed in connection with this Lease, shall constitute a waiver by Landlord of such Event of Default or any other or future Event of Default. Further, the failure by Landlord to complain of any action or inaction by Tenant, or to assert that any action or inaction by Tenant constitutes (or would constitute, with the giving of notice and the passage of time) an Event of Default, regardless of how long such failure continues, shall not extinguish, waive or in any way diminish the rights, remedies and recourses of Landlord with respect to such action or inaction. No waiver by Landlord of any provision of this Lease or of any breach by Tenant of any obligation of Tenant hereunder shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach by Tenant of the same or any other provision hereof. Landlord’s consent to any act by Tenant requiring Landlord’s consent shall not be deemed to render unnecessary the obtaining of Landlord’s consent to any subsequent act of Tenant. No act or omission by Landlord (other than Landlord’s execution of a document acknowledging such surrender) or Landlord’s agents, including the delivery of the keys to the Leased Premises, shall constitute an acceptance of a surrender of the Leased Premises.

 

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16.10 Upon any Event of Default, Tenant shall also pay to Landlord all reasonable costs and expenses incurred by Landlord, including court costs and expenses incurred by Landlord, in (a) retaking or otherwise obtaining possession of the Leased Premises, (b) removing and storing Tenant’s or any other occupant’s property, (c) repairing, restoring, or otherwise putting the Leased Premises into as good a condition as that in which it was originally delivered to Tenant, (d) reletting all or any part of the Leased Premises, (e) paying or performing the underlying obligation which Tenant failed to pay or perform, or (f) enforcing any of Landlord’s rights, remedies or recourses arising as a consequence of the Event of Default. Tenant’s obligations under this Paragraph shall survive the expiration or earlier termination of this Lease.

16.11 If Tenant shall fail to pay any installment of Rent within five (5) days after receipt of written notice from Landlord more than two (2) times within a Lease Year, Tenant agrees to pay a late fee of $30 per day for each day after the due date that rent is not delivered to Landlord.

16.12 Landlord shall be in default hereunder only if Landlord has failed, within thirty (30) days from the receipt by Landlord of notice from Tenant of any alleged default by Landlord, to begin and pursue with reasonable diligence the cure of any alleged and actual default of Landlord hereunder. Unless or until Landlord fails to commence cure any default after the receipt of such notice and the passage of such time, Tenant shall not have any remedy or cause of action by reason thereof. In the event of any default by Landlord, Tenant’s exclusive remedy shall be an action for damages or a suit for specific performance (Tenant hereby waiving the benefit of any laws granting Tenant a lien upon the property of Landlord and/or upon Rent due to Landlord or the right to terminate this Lease). The obligations of Tenant to pay Rent and to perform the other undertakings of Tenant hereunder constitute independent unconditional obligations to be performed at the times specified hereunder, regardless of any breach or default by Landlord hereunder. Tenant shall have no right, and Tenant hereby waives and relinquishes all rights which Tenant might otherwise have, to withhold, deduct from or offset against any Rent or other sums to be paid to Landlord by Tenant. Landlord’s obligations hereunder shall be construed as covenants, not conditions.

16.13 If Landlord defaults under this Lease and, as a consequence of the default, Tenant recovers a money judgment against Landlord and/or any of the Landlord Related Parties, the judgment shall be satisfied only out of, and Tenant hereby agrees to look solely to, the interest of Landlord and/or any of the Landlord Related Parties in the Leased Premises as the same may then be encumbered, and neither Landlord nor any Landlord Related Parties shall otherwise be liable for any deficiency. In no event shall Tenant have the right to levy execution against any property of Landlord or any of the Landlord Related Parties other than their interest in the Leased Premises. Under no circumstances whatsoever shall Landlord or any Landlord Related Party ever be liable hereunder in any capacity for consequential damages or special damages. The foregoing limitations shall survive the expiration or earlier termination of this Lease.

ARTICLE 17. SURRENDER AND HOLDING OVER

17.1 Upon the expiration or termination of the Lease Term for whatever cause, or upon the exercise by Landlord of its right to re-enter the Leased Premises without terminating this Lease, Tenant shall immediately, quietly and peaceably surrender to Landlord possession of the Leased Premises in “broom clean” and good order, condition and repair, except only for ordinary wear and tear, and damage by casualty not covered by Section 6.4. If Tenant fails to surrender possession as herein required, Landlord may initiate any and all legal action as Landlord may elect to dispossess Tenant and all of its property, and all persons or entities claiming by, through or under Tenant and all of their property, from the Leased Premises, and may remove from the Leased Premises and store (without any liability for loss, theft, damage or destruction thereto) any such property at Tenant’s cost and expense. If Tenant fails to surrender possession of the Leased Premises in the condition herein required, Landlord may, at Tenant’s expense, restore the Leased Premises to such condition.

 

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17.2 For so long as Tenant remains in possession of the Leased Premises after the expiration or termination of the Lease Term, or exercise by Landlord of its re-entry right, Tenant shall be deemed to be occupying the Leased Premises as a tenant-at-sufferance, subject to all of the obligations of Tenant under this Lease, except that the daily Rent shall be twice the per day Rent in effect immediately prior to such expiration, termination or exercise by Landlord. No such holding over shall extend the Lease Term. Tenant shall be liable to Landlord for all loss or damage on account of any such holding over against Landlord’s will after the termination of this Lease, whether such loss or damage may be contemplated at this time or not.

17.3 Tenant’s obligations under this Article 17 shall survive the expiration or earlier termination of this Lease.

ARTICLE 18. SUBORDINATION AND ESTOPPEL

18.1 Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust, or other lien presently existing or hereafter placed upon the Leased Premises, and to any renewals and extensions thereof; but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority, if it so elects at any time, to subordinate this Lease to any mortgage, deed of trust, or other lien hereafter placed upon the Leased Premises. Tenant agrees, upon demand to execute such further instruments subordinating this Lease as Landlord may reasonably request, to evidence such subordination. In the event that Tenant should fail to execute any such instrument promptly as reasonably requested, Tenant hereby irrevocably constitutes Landlord its attorney-in-fact to execute such instrument in Tenant’s name, place and stead. Upon the written request of any person or party succeeding to the interest of Landlord under this Lease, Tenant shall automatically become the tenant of and attorn to such successor in interest without any change in any of the terms of this Lease. In the event the Leased Premises is encumbered by any mortgage, deed of trust, or other lien, Tenant shall have the right to request that Landlord use reasonable efforts to obtain a non-disturbance agreement on said lien holder’s standard form.

18.2 Landlord and Tenant shall promptly execute and deliver to each other within twenty (20) days of request, a certificate stating:

	A.	Whether or not the Lease is in full force.
	B.	Whether or not the Lease has been modified or amended in any respect, and submit such copies of such modifications or amendments, if any.
	C.	Whether or not there are any existing defaults under the Lease as far as the party executed the certificate knows and specifying the nature of such defaults, if any.
	D.	Such other information to the responding party’s knowledge as may be reasonably requested.

 

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ARTICLE 19. NOTICES

19.1 Except as otherwise provided herein, all notices, demands, requests, and other communications required or permitted hereunder shall be given in writing and sent by personal delivery, or expedited delivery service with proof of delivery, or United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the addressee at such party’s address set forth in Section 1.1 above, or to such other address as such party may specify by written notice, sent in accordance with this Paragraph at least ten (10) days prior to the date of the giving of such notice. Any such notice or communication shall be deemed to have been given and received either at the time of personal delivery, or in the case of mail, three (3) days after the date of deposit in an official depository of the United States mail, or in the case of delivery service, upon receipt. To the extent actual receipt is required, rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was received shall be deemed to be receipt of the notice, demand, request or other communication sent.

ARTICLE 20. ENVIRONMENTAL COVENANTS/INDEMINTY

20.1 Tenant covenants that (1) no activity will be conducted on the Leased Premises that will produce any Substance (as defined below), except for such activities that are part of the ordinary course for the Permitted Use provided the Permitted Use is conducted in accordance with all Environmental Laws (as defined below); (2) the Leased Premises will not be used in any manner for the storage of any Substances except for the temporary storage of such materials that are used in the ordinary course of the Permitted Lease (the “ Permitted Materials ”) provided such Permitted Materials are properly stored in a manner and location meeting all Environmental Laws; (3) no portion of the Leased Premises will be used as a landfill or a dump; (4) Tenant will not install any underground tanks of any type; (5) Tenant will not allow any surface or subsurface conditions to exist or come into existence that constitute, or with the passage of time may constitute a public or private nuisance; (6) Tenant will not permit any Substances to be brought onto the Leased Premises, except for the Permitted Materials, and if so brought or found located thereon, the same shall be removed, with proper disposal, and all required cleanup procedures shall be diligently undertaken pursuant to all Environmental Laws. The term “ Substances ”, as used in this Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any other substances, the use, storage, handling, disposal, transportation or removal of which is regulated, restricted prohibited or penalized by any “ Environmental Law ”, which term shall mean any federal, state or local law, ordinance or other statute of a governmental or quasi-governmental authority relating to pollution or protection of the environment and shall specifically include, but not be limited to, any “hazardous substance” as that term is defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and any amendments or successors in function thereto. Landlord or Landlord’s representative shall have the right but not the obligation to enter the Leased Premises for the purpose of inspecting the storage, use and disposal of Permitted Materials to ensure compliance with all Environmental Laws. Tenant shall be responsible for obtaining any required permits and paying any fees and providing any testing required by any governmental agency or Environmental Law. Should it be determined, in Landlord’s sole opinion, that Permitted Materials are being improperly stored, used, or disposed of, then Tenant shall immediately take such corrective action as requested by Landlord. Should Tenant fail to take such corrective action within 24 hours, Landlord shall have the right to perform such work and Tenant shall promptly reimburse Landlord for any and all costs associated with said work. If at any time during or after the Lease Term the Leased Premises are found to be so contaminated or subject to said conditions, Tenant shall diligently institute proper and thorough cleanup procedures at Tenant’s sole cost, and Tenant agrees to indemnify and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, damages, fines, reimbursement, restitution, response costs, cleanup costs, and obligations (including investigative responses and attorney’s fees) of any nature arising from or as a result of the use of the Leased Premises during the Lease Term in violation of the covenants of this Section 20.1. The foregoing indemnification obligations of Tenant and the responsibilities of Tenant under this Section 20.1 shall survive the expiration or earlier termination of this Lease.

 

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ARTICLE 21. MISCELLANEOUS

21.1 Nothing herein contained shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto. It is expressly understood and agreed that the parties have no relationship other than the relationship of landlord and tenant.

21.2 The captions used in this Lease are for convenience only and do not in any way limit or amplify the terms and provisions hereof.

21.3 Time is of the essence with respect to each date or time specified in this Lease by which an event is to occur. Notwithstanding the foregoing, whenever a period of time is herein prescribed for action to be taken by Landlord or Tenant, neither shall be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions or any other causes of any kind whatsoever which are beyond the reasonable control of Landlord or Tenant; provided, however, the foregoing shall not apply to any payment of money.

21.4 The laws of the State of Missouri shall govern the interpretation, validity, performance, and enforcement of this Lease. If any provision of this Lease should be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions of this Lease shall not be affected thereby.

21.5 Landlord hereby covenants and agrees that if Tenant shall timely perform all of the covenants and agreements herein required to be performed on the part of Tenant, Tenant shall, subject to the terms of this Lease, at all times during the continuance of this Lease have the peaceable and quiet enjoyment and possession of the Leased Premises.

21.6 Words of any gender used in this Lease shall be held and construed to include any gender and words in the singular number shall be held to include the plural, unless the context otherwise requires.

21.7 This Lease, together with the attached Exhibits, contains the entire agreement between the parties, and supersedes any prior understandings or written or oral agreements between the parties. No amendment, modification or alteration of this Lease shall be effective to change, modify or terminate this Lease in whole or in part unless such agreement is in writing and duly signed by the party against whom enforcement of such change, modification or termination is sought.

21.8 The terms, provisions and covenants contained in this Lease shall apply to, inure to the benefit of and be binding upon the parties hereto and their respective successors in interest and permitted assigns. All rights, powers, privileges, immunities and duties of Landlord under this Lease, including but not limited to any notices required or permitted to be delivered by Landlord to Tenant hereunder, may, at Landlord’s option, be exercised or performed by an agent of Landlord or Landlord’s attorney. All rights, powers, privileges, immunities and duties of Tenant under this Lease, including but not limited to any notices required or permitted to be delivered by Tenant to Landlord hereunder, may, at Tenant’s option, be exercised or performed by an agent of Tenant or Tenant’s attorney.

21.9 Each party warrants and represents that it has not incurred or authorized any brokerage commission, finder’s fees or similar payments in connection with this Lease, and agrees to defend, indemnify and hold the other party harmless from and against any claim for brokerage commission, finder’s fees or similar payment arising by virtue of authorization of such party, or any affiliate of such party, in connection with this Lease.

21.10 Any amount due from Tenant to Landlord which is not paid within five (5) days after when due shall bear interest at the lesser of the maximum rate allowed by law, or 18% per annum, from the date such payment is due until paid, but the payment of such interest shall not excuse or cure the default in payment.

 

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21.11 Each party warrants and represents to the other party that (a) it is duly organized, legally existing, and in good standing in its state of formation; (b) it has full right and authority to execute, deliver and perform this Lease; and (c) the person executing this Lease on its behalf was authorized to do so.

21.12 Neither this Lease (including any Exhibit hereto) nor any memorandum hereof shall be recorded without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

21.13 This Lease may be executed in multiple counterparts (including by means of facsimile or portable document format (pdf) signature pages), each of which shall be an original, but all of which shall constitute but one instrument. This Lease, to the extent signed and delivered by means of a facsimile machine or electronic transmission in portable document format (pdf), shall be treated in all manner and respects as an original thereof and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto, the other party shall re-execute original forms hereof and deliver them to the other parties. No party hereto shall raise the use of a facsimile machine or electronic transmission in portable document format (pdf) to deliver a signature or the fact that any signature or document was transmitted or communicated through the use of a facsimile machine or electronic transmission in portable document format (pdf) as a defense to the formation of a contract, and each such party forever waives any such defense.

21.14 Both parties waive trial by jury and agree all disputes are to be resolved by an arbitration proceeding to be held and conducted in the County of St. Louis, State of Missouri in accordance with the provisions of Chapter 435 of the revised statutes of Missouri.

[ Remainder of Page Left Intentionally Blank. Signature Page(s) to Follow. ]

 

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IN WITNESS WHEREOF, the parties have caused this Lease to be signed effective as of the date and year first set forth above.

LANDLORD:			TENANT:
S.H.J., L.L.C.			1847 GOEDEKER INC.
By:	/s/ Steve Goedeker		By:	/s/ Robert D. Barry
Name:	Steve Goedeker		Name:	Robert D. Barry
Title:	Member		Title:	Chief Financial Officer
Date: April 5, 2019			Date: April 5, 2019

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EXHIBIT “A”

LEASED PREMISES

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EXHIBIT 10.7

MANAGEMENT SERVICES AGREEMENT

BY AND BETWEEN

1847 GOEDEKER INC.

AND

1847 PARTNERS LLC

Dated as of April 5, 2019

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MANAGEMENT SERVICES AGREEMENT

MANAGEMENT SERVICES AGREEMENT (as amended, revised, supplemented or otherwise modified from time to time, this “ Agreement ”), dated as of April 5, 2019, by and between 1847 GOEDEKER 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.

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“ 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.

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“ 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.

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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

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(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.

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(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.

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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.

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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 equal to the greater of $62,500 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.

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(c) Notwithstanding the foregoing, payment of the Management Fee shall be subordinated to the payment of interest on the Buyer Note, as defined in that certain Asset Purchase Agreement, dated January 18, 2019, between the Company and Goedeker Television Co. (the “ APA ”), such that no payment of the Management Fee may be made if the Company is in default under the Buyer Note with regard to interest payments and, for the avoidance of doubt, such payment of the Management Fee will be contingent on the Company being in good standing on all associated loan covenants. In addition, during the period that that any amounts are owed under the Buyer Note or the Earn-Out (as defined in the APA), the annual Management Fee shall be capped at $250,000.

(d) In addition, payment of the Management Fee is subject to the provisions of (i) the Management Fee Subordination Agreement, dated as of the date hereof, between Burnley Capital LLC and the Manager and (ii) and the Management Fee Subordination Agreement, dated as of the date hereof, between Small Business Community Capital, L.P. and the Manager.

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.

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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.

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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.

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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.

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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:

13850 Manchester Rd.

Ballwin, MO 63011

Attn: Robert D. Barry

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 Avenue, NW, Suite 500

Washington, DC 20036

Attn: Louis A. Bevilacqua

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.

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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.

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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.

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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.

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(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.

* * *

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

	1847 GOEDEKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Title:	President
	1847 PARTNERS LLC
	By:	/s/ Ellery W. Roberts
	Name:	Ellery W. Roberts
	Title:	Manager

[Signature Page to Management Services Agreement] 

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EXHIBIT 10.8

MANAGEMENT FEE SUBORDINATION AGREEMENT

THIS MANAGEMENT FEE SUBORDINATION AGREEMENT (the “ Agreement ”) is entered into as of April 5, 2019 by and between BURNLEY CAPITAL LLC, a Delaware limited liability company (together with its successors and assigns, “ Lender ”) and 1847 PARTNERS LLC, a Delaware limited liability company (the “ Manager ”).

The Lender, 1847 Goedeker, Inc., a Delaware corporation (“ Borrower ”) and 1847 Goedeker Holdco Inc., a Delaware corporation, are parties to a Loan and Security Agreement dated concurrently herewith (as the same may be amended, supplemented or otherwise modified, or replaced or refinanced, from time to time, the “ Loan Agreement ”).

The Manager and Borrower are parties that certain Management Services Agreement dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, the “ Management Agreement ”) pursuant to which the Manager provides management services to the Borrower and its subsidiaries (collectively, the “ Loan Parties ”).

As a condition to extending credit to the Borrower under the Loan Agreement, the Lender has required the execution and delivery of this Agreement.

The Manager is of the opinion that such execution and delivery is in its best interest to assist the Borrower in obtaining credit from the Lender.

ACCORDINGLY, in consideration of the loans and other financial accommodations that may hereafter be made by the Lender for the benefit of the Loan Parties, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Manager hereby agrees as follows:

1. Definitions . All defined terms used herein that are not otherwise defined herein shall have the meanings given them in the Loan Agreement. In addition, as used herein, the following terms have the meanings set forth below:

“ Senior Indebtedness ” means each and every debt, liability and obligation of every type and description which the Loan Parties may now or at any time hereafter owe to the Lender arising under or in connection with the Loan Agreement, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several, including but not limited to the indebtedness evidenced by any notes, all interest thereon, all renewals, extensions and modifications thereof and any notes issued in whole or partial substitution therefor.

“ Subordinated Obligations ” means each and every debt, liability and obligation of every type and description which the Loan Parties may now or at any time hereafter owe to the Manager pursuant to the Management Agreement, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several.

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2. Subordination . The payment of all of the Subordinated Obligations is hereby expressly subordinated to the extent and in the manner hereinafter set forth to the payment in full of the Senior Indebtedness.

3. Payments . So long as any of the Senior Indebtedness remains outstanding or the Lender has the obligation to make advances or other financial accommodations to or for the benefit of the Loan Parties, the Manager shall not, without the prior written consent of the Lender, demand, receive or accept any payment from the Loan Parties in respect of the Subordinated Obligations, except that, so long as no Default or Event of Default has occurred and is continuing under the Loan Agreement, the Manager may accept payments of management fees (up to a maximum of $250,000 in the aggregate in any one calendar year), but only to the extent that such payments are not prohibited under, or would not cause or result in the default of any financial covenants set forth in, the Loan Agreement.

4. Receipt of Prohibited Payments . If the Manager receives any payment on the Subordinated Obligations that it is not entitled to receive under the provisions of this Agreement, the Manager will hold the amount so received in trust for the Lender and will forthwith turn over such payment to the Lender in the form received (except for the endorsement of the Manager where necessary) for application to then-existing Senior Indebtedness (whether or not due). If the Manager fails to make any endorsement required under this Agreement, the Lender, or its officers or employees or agents, on behalf of the Lender, is hereby irrevocably appointed as the attorney-in-fact for the Manager to make such endorsement in the Manager’s name.

5. Security Interests . The Manager warrants and represents that the Subordinated Obligations are unsecured and agrees that (i) the Manager hereafter will not, unless and until all of the Senior Indebtedness shall have been fully paid and satisfied and all financial arrangements between the Loan Parties and the Lender have been terminated, accept any security therefor from the Loan Parties or any other Person for all or part of the Subordinated Obligations and (ii) in the event the Manager does obtain any security for the Subordinated Obligations, at the request of the Lender, the Manager shall execute and deliver to the Lender, and hereby authorizes the Lender to prepare and record, such termination statements and releases as the Lender shall reasonably request or require to release the Manager’s security interest or lien against such property.

6. Action on Subordinated Debt . The Manager will not commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Obligations, or join with any creditor (unless the Lender shall so join) in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt receivership, liquidation or insolvency law or statute of the federal or any state government, or take possession of, sell, or dispose of any collateral, or exercise or enforce any right or remedy available to the Manager with respect to any such collateral, unless and until the Senior Indebtedness has been paid in full.

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7. Bankruptcy and Insolvency . In the event of any receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement with creditors, whether or not pursuant to bankruptcy law, the sale of all or substantially all of the assets of either of the Loan Parties, dissolution, liquidation or any other marshaling of the assets or liabilities of the Loan Parties, the Manager will file all claims, proofs of claim or other instruments of similar character necessary to enforce the obligations of the Loan Parties in respect of the Subordinated Obligations and will hold in trust for the Lender and promptly pay over to the Lender in the form received (except for the endorsement of the Manager where necessary) for application to the then-existing Senior Indebtedness, any and all moneys, dividends or other assets received in any such proceedings on account of the Subordinated Obligations, unless and until the Senior Indebtedness has been paid in full. If the Manager shall fail to take any such action, the Lender, as attorney-in-fact for the Manager, may, but shall not be obligated to, take such action on the Manager’s behalf. The Manager hereby irrevocably appoints the Lender, or any of its agents, officers or employees on behalf of the Lender, as the attorney-in-fact for the Manager to demand, sue for, collect and receive any and all such moneys, dividends or other assets and give acquittance therefor and to file any claim, proof of claim or other instrument of similar character, and to take such other action in the Lender’s own name or in the Manager’s name as the Lender may deem necessary or advisable for the enforcement of the agreements contained herein; and the Manager will execute and deliver to the Lender such other and further powers-of-attorney or instruments as the Lender may request in order to accomplish the foregoing.

8. Restrictive Legend; Transfer of Subordinated Obligations . The Manager will cause the Management Agreement and all notes, bonds, debentures or other instruments evidencing the Subordinated Obligations or any part thereof to contain a specific statement thereon to the effect that the indebtedness thereby evidenced is subject to the provisions of this Agreement. So long as there remains outstanding any Senior Indebtedness or the Lender has any remaining obligation to make advances or other financial accommodations to or for the benefit of the Loan Parties, the Manager will not, without the prior written consent of the Lender, (i) assign, transfer or pledge to any other person any of the Subordinated Obligations, or (ii) agree to a discharge or forgiveness of any of the Subordinated Obligations.

9. Continuing Effect . This Agreement shall constitute a continuing and irrevocable subordination, and the Lender may, without notice to or consent by the Manager, modify any term of the Senior Indebtedness in reliance upon this Agreement. Without limiting the generality of the foregoing, the Lender may, at any time and from time to time, without the consent of or notice to the Manager and without incurring responsibility to the Manager or impairing or releasing any of the rights of the Lender or any of the Manager’s obligations hereunder:

(a) change the interest rate or change the amount of payment or extend the time for payment or renew or otherwise alter the terms of any Senior Indebtedness or any instrument evidencing the same in any manner or create new or additional Senior Indebtedness of any type at any time and from time to time;

(b) sell, exchange, release or otherwise deal with any property at any time securing payment of the Senior Indebtedness or any part thereof;

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(c) release anyone liable in any manner for the payment or collection of the Senior Indebtedness or any part thereof;

(d) exercise or refrain from exercising any right against the Loan Parties or any other person (including the Manager); and

(e) apply any sums received by the Lender, by whomsoever paid and however realized, to the Senior Indebtedness in such manner as the Lender shall deem appropriate.

10. No Commitment . None of the provisions of this Agreement shall be deemed or construed to constitute or imply any commitment or obligation on the part of the Lender to make any future loans or other extensions of credit or financial accommodations to the Loan Parties.

11. Notice . All notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by Federal Express or similar expedited delivery service, or (iv) transmitted by facsimile, in each case addressed to the party to whom notice is being given at the address as set forth by that party’s signature below, or at such other address as may hereafter be designated in writing by that party. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) three business days after the date of posting if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expedited delivery service, or (iv) the first business day after date of transmission if delivered by facsimile.

12. Conflict in Agreements . If the subordination provisions of any instrument evidencing Subordinated Obligations conflict with the terms of this Agreement, the terms of this Agreement shall govern the relationship between the Lender on the one hand, and the Manager on the other hand.

13. No Waiver . No waiver shall be deemed to be made by the Lender of any of its rights hereunder unless the same shall be in writing signed on behalf of the Lender, and each such waiver, if any, shall be a waiver only with respect to the specific matter or matters to which the waiver relates and shall in no way impair the rights of the Lender or the obligations of the Manager to the Lender in any other respect at any time.

14. Binding Effect; Acceptance . This Agreement shall be binding upon the Manager and its successors and assigns and shall inure to the benefit of the Lender and its respective successors and assigns irrespective of whether this or any similar agreement is executed by any other creditor of the Loan Parties. Notice of acceptance by the Lender of this Agreement or of reliance by the Lender upon this Agreement is hereby waived by the Manager.

[THE SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Lender and the Manager have executed this Agreement as of the date and year first above-written.

Address:	BURNLEY CAPITAL LLC
212 3rd Avenue N., Suite 505 Minneapolis, MN 55401
	By:	/s/ Daniel O’Rourke
	Name:	Daniel O’Rourke
	Title:	Authorized Officer
Address:	1847 PARTNERS LLC
590 Madison Avenue, 18th Floor New York, NY 98001
Attn: Ellery W. Roberts	By:	/s/ Ellery W. Roberts
	Name:	Ellery W. Roberts
	Title:	Chief Executive Officer

[Signature Page to Management Fee Subordination Agreement]

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Acknowledgment by the Borrower

The undersigned, being the Borrower referred to in the foregoing Management Fee Subordination Agreement, hereby (i) acknowledge receipt of a copy thereof, (ii) agree to all of the terms and provisions thereof, (iii) agree to and with the Lender that it shall make no payment on the Subordinated Obligations that the Manager would not be entitled to receive under the provisions of such Agreement, (iv) agree that any such payment will constitute a default under the Senior Indebtedness, and (v) agree to mark its books conspicuously to evidence the subordination of the Subordinated Obligations effected hereby. The undersigned further acknowledge and agree that the foregoing Management Fee Subordination Agreement may be modified and amended at any time or times without notice to or the consent of the undersigned and that the undersigned is not an intended beneficiary of any of the rights, benefits or privileges granted to the Lender pursuant to such Agreement.

	1847 GOEDEKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Title:	Chief Financial Officer

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EXHIBIT 10.9

Execution Version

This instrument and the indebtedness evidenced hereby, and the rights and remedies of the holders of this instrument, are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions thereof, the “Subordination Agreement”) dated as of April 5, 2019, by and among 1847 Goedeker Inc., a Delaware corporation, 1847 Goedecker Holdco Inc., a Delaware corporation, Small Business Community Capital II, L.P., a Delaware limited partnership, and Burnley Capital LLC, a Delaware limited liability company, to the Senior Indebtedness (as defined in the Subordination Agreement); and each holder of this instrument, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement.

MANAGEMENT FEE SUBORDINATION AGREEMENT

THIS MANAGEMENT FEE SUBORDINATION AGREEMENT (the “ Agreement ”) is entered into as of April 5, 2019 by and between SMALL BUSINESS COMMUNITY CAPITAL II L.P., a Delaware limited partnership (together with its successors and assigns, “ Lender ”) and 1847 PARTNERS LLC, a Delaware limited liability company (the “ Manager ”).

The Lender, 1847 Goedeker, Inc., a Delaware corporation (“ Borrower ”) and 1847 Goedeker Holdco Inc., a Delaware corporation, are parties to a Loan and Security Agreement dated concurrently herewith (as the same may be amended, supplemented or otherwise modified, or replaced or refinanced, from time to time, the “ Loan Agreement ”).

The Manager and Borrower are parties that certain Management Services Agreement dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, the “ Management Agreement ”) pursuant to which the Manager provides management services to the Borrower and its subsidiaries (collectively, the “ Loan Parties ”).

As a condition to extending credit to the Borrower under the Loan Agreement, the Lender has required the execution and delivery of this Agreement.

The Manager is of the opinion that such execution and delivery is in its best interest to assist the Borrower in obtaining credit from the Lender.

ACCORDINGLY, in consideration of the loans and other financial accommodations that may hereafter be made by the Lender for the benefit of the Loan Parties, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Manager hereby agrees as follows:

1. Definitions . All defined terms used herein that are not otherwise defined herein shall have the meanings given them in the Loan Agreement. In addition, as used herein, the following terms have the meanings set forth below:

“ Senior Indebtedness ” means each and every debt, liability and obligation of every type and description which the Loan Parties may now or at any time hereafter owe to the Lender arising under or in connection with the Loan Agreement, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several, including but not limited to the indebtedness evidenced by any notes, all interest thereon, all renewals, extensions and modifications thereof and any notes issued in whole or partial substitution therefor.

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Execution Version

“ Subordinated Obligations ” means each and every debt, liability and obligation of every type and description which the Loan Parties may now or at any time hereafter owe to the Manager pursuant to the Management Agreement, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several.

2. Subordination . The payment of all of the Subordinated Obligations is hereby expressly subordinated to the extent and in the manner hereinafter set forth to the payment in full of the Senior Indebtedness.

3. Payments . So long as any of the Senior Indebtedness remains outstanding or the Lender has the obligation to make advances or other financial accommodations to or for the benefit of the Loan Parties, the Manager shall not, without the prior written consent of the Lender, demand, receive or accept any payment from the Loan Parties in respect of the Subordinated Obligations, except that, so long as no Default or Event of Default has occurred and is continuing under the Loan Agreement, the Manager may accept payments of management fees (up to a maximum of $250,000 in the aggregate in any one calendar year), but only to the extent that such payments are not prohibited under, or would not cause or result in the default of any financial covenants set forth in, the Loan Agreement.

4. Receipt of Prohibited Payments . If the Manager receives any payment on the Subordinated Obligations that it is not entitled to receive under the provisions of this Agreement, the Manager will hold the amount so received in trust for the Lender and will forthwith turn over such payment to the Lender in the form received (except for the endorsement of the Manager where necessary) for application to then-existing Senior Indebtedness (whether or not due). If the Manager fails to make any endorsement required under this Agreement, the Lender, or its officers or employees or agents, on behalf of the Lender, is hereby irrevocably appointed as the attorney-in-fact for the Manager to make such endorsement in the Manager’s name.

5. Security Interests . The Manager warrants and represents that the Subordinated Obligations are unsecured and agrees that (i) the Manager hereafter will not, unless and until all of the Senior Indebtedness shall have been fully paid and satisfied and all financial arrangements between the Loan Parties and the Lender have been terminated, accept any security therefor from the Loan Parties or any other Person for all or part of the Subordinated Obligations and (ii) in the event the Manager does obtain any security for the Subordinated Obligations, at the request of the Lender, the Manager shall execute and deliver to the Lender, and hereby authorizes the Lender to prepare and record, such termination statements and releases as the Lender shall reasonably request or require to release the Manager’s security interest or lien against such property.

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6. Action on Subordinated Debt . The Manager will not commence any action or proceeding against the Loan Parties to recover all or any part of the Subordinated Obligations, or join with any creditor (unless the Lender shall so join) in bringing any proceeding against the Loan Parties under any bankruptcy, reorganization, readjustment of debt, arrangement of debt receivership, liquidation or insolvency law or statute of the federal or any state government, or take possession of, sell, or dispose of any collateral, or exercise or enforce any right or remedy available to the Manager with respect to any such collateral, unless and until the Senior Indebtedness has been paid in full.

7. Bankruptcy and Insolvency . In the event of any receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement with creditors, whether or not pursuant to bankruptcy law, the sale of all or substantially all of the assets of either of the Loan Parties, dissolution, liquidation or any other marshaling of the assets or liabilities of the Loan Parties, the Manager will file all claims, proofs of claim or other instruments of similar character necessary to enforce the obligations of the Loan Parties in respect of the Subordinated Obligations and will hold in trust for the Lender and promptly pay over to the Lender in the form received (except for the endorsement of the Manager where necessary) for application to the then-existing Senior Indebtedness, any and all moneys, dividends or other assets received in any such proceedings on account of the Subordinated Obligations, unless and until the Senior Indebtedness has been paid in full. If the Manager shall fail to take any such action, the Lender, as attorney-in-fact for the Manager, may, but shall not be obligated to, take such action on the Manager’s behalf. The Manager hereby irrevocably appoints the Lender, or any of its agents, officers or employees on behalf of the Lender, as the attorney-in-fact for the Manager to demand, sue for, collect and receive any and all such moneys, dividends or other assets and give acquittance therefor and to file any claim, proof of claim or other instrument of similar character, and to take such other action in the Lender’s own name or in the Manager’s name as the Lender may deem necessary or advisable for the enforcement of the agreements contained herein; and the Manager will execute and deliver to the Lender such other and further powers-of-attorney or instruments as the Lender may request in order to accomplish the foregoing.

8. Restrictive Legend; Transfer of Subordinated Obligations . The Manager will cause the Management Agreement and all notes, bonds, debentures or other instruments evidencing the Subordinated Obligations or any part thereof to contain a specific statement thereon to the effect that the indebtedness thereby evidenced is subject to the provisions of this Agreement. So long as there remains outstanding any Senior Indebtedness or the Lender has any remaining obligation to make advances or other financial accommodations to or for the benefit of the Loan Parties, the Manager will not, without the prior written consent of the Lender, (i) assign, transfer or pledge to any other person any of the Subordinated Obligations, or (ii) agree to a discharge or forgiveness of any of the Subordinated Obligations.

9. Continuing Effect . This Agreement shall constitute a continuing and irrevocable subordination, and the Lender may, without notice to or consent by the Manager, modify any term of the Senior Indebtedness in reliance upon this Agreement. Without limiting the generality of the foregoing, the Lender may, at any time and from time to time, without the consent of or notice to the Manager and without incurring responsibility to the Manager or impairing or releasing any of the rights of the Lender or any of the Manager’s obligations hereunder:

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(a) change the interest rate or change the amount of payment or extend the time for payment or renew or otherwise alter the terms of any Senior Indebtedness or any instrument evidencing the same in any manner or create new or additional Senior Indebtedness of any type at any time and from time to time;

(b) sell, exchange, release or otherwise deal with any property at any time securing payment of the Senior Indebtedness or any part thereof;

(c) release anyone liable in any manner for the payment or collection of the Senior Indebtedness or any part thereof;

(d) exercise or refrain from exercising any right against the Loan Parties or any other person (including the Manager); and

(e) apply any sums received by the Lender, by whomsoever paid and however realized, to the Senior Indebtedness in such manner as the Lender shall deem appropriate.

10. No Commitment . None of the provisions of this Agreement shall be deemed or construed to constitute or imply any commitment or obligation on the part of the Lender to make any future loans or other extensions of credit or financial accommodations to the Loan Parties.

11. Notice . All notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by Federal Express or similar expedited delivery service, or (iv) transmitted by facsimile, in each case addressed to the party to whom notice is being given at the address as set forth by that party’s signature below, or at such other address as may hereafter be designated in writing by that party. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) three business days after the date of posting if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expedited delivery service, or (iv) the first business day after date of transmission if delivered by facsimile.

12. Conflict in Agreements . If the subordination provisions of any instrument evidencing Subordinated Obligations conflict with the terms of this Agreement, the terms of this Agreement shall govern the relationship between the Lender on the one hand, and the Manager on the other hand.

13. No Waiver . No waiver shall be deemed to be made by the Lender of any of its rights hereunder unless the same shall be in writing signed on behalf of the Lender, and each such waiver, if any, shall be a waiver only with respect to the specific matter or matters to which the waiver relates and shall in no way impair the rights of the Lender or the obligations of the Manager to the Lender in any other respect at any time.

14. Binding Effect; Acceptance . This Agreement shall be binding upon the Manager and its successors and assigns and shall inure to the benefit of the Lender and its respective successors and assigns irrespective of whether this or any similar agreement is executed by any other creditor of the Loan Parties. Notice of acceptance by the Lender of this Agreement or of reliance by the Lender upon this Agreement is hereby waived by the Manager.

[THE SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Lender and the Manager have executed this Agreement as of the date and year first above-written.

Address: 9W Broad Street	SMALL BUSINESS COMMUITY CAPITAL II L.P.
Samford, CT 06902
Attention: Crandall P. Deery	By:	/s/ Crandall P. Deery
	Name:	Crandall P. Deery
	Title:	Partner
Address:	1847 PARTNERS LLC
590 Madison Avenue, 18th Floor New York, NY 98001
Attn: Ellery W. Roberts	By:	/s/ Ellery W. Roberts
	Name:	Ellery W. Roberts
	Title:	Chief Executive Officer

[Signature Page to Management Fee Subordination Agreement]

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Acknowledgment by the Borrower

The undersigned, being the Borrower referred to in the foregoing Management Fee Subordination Agreement, hereby (i) acknowledge receipt of a copy thereof, (ii) agree to all of the terms and provisions thereof, (iii) agree to and with the Lender that it shall make no payment on the Subordinated Obligations that the Manager would not be entitled to receive under the provisions of such Agreement, (iv) agree that any such payment will constitute a default under the Senior Indebtedness, and (v) agree to mark its books conspicuously to evidence the subordination of the Subordinated Obligations effected hereby. The undersigned further acknowledge and agree that the foregoing Management Fee Subordination Agreement may be modified and amended at any time or times without notice to or the consent of the undersigned and that the undersigned is not an intended beneficiary of any of the rights, benefits or privileges granted to the Lender pursuant to such Agreement.

	1847 GOEDEKER INC.
	By:	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Title:	Chief Financial Officer

[Signature Page to Management Fee Subordination Agreement]

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EXHIBIT 10.10

LOAN AND SECURITY AGREEMENT

dated as of April 5, 2019,

among

1847 GOEDEKER INC.,

as Borrower,

the other parties hereto that

are designated as Loan Parties, and

BURNLEY CAPITAL LLC ,

as Lender

Table of Contents

ARTICLE 1 DEFINITIONS				1
	1.1	Defined Terms		1
	1.2	UCC Definitions		15
	1.3	Accounting Terms; GAAP		15
	1.4	Terms Generally		15
	1.5	Divisions		16
ARTICLE 2 TERMS OF LENDING				16
	2.1	Revolving Facility		16
	2.2	Increase to Revolving Facility Amount		16
	2.3	Requests for Revolving Loans; Disbursements of Revolving Loans.		16
	2.4	Termination of Revolving Commitment		17
	2.5	Repayment of Loans; Evidence of Debt.		17
	2.6	Prepayment of Loans.		17
	2.7	Fees.		18
	2.8	Interest.		19
	2.9	Increased Costs		20
	2.10	Taxes.		21
	2.11	Payments Generally; Allocation of Proceeds.		21
	2.12	Returned Payments		22
	2.13	Extension Option		22
ARTICLE 3 CONDITIONS PRECEDENT				23
	3.1	Closing Date Conditions		23
	3.2	[Intentionally Omitted].		25
	3.3	Conditions to Each Extension of Credit		25
ARTICLE 4 SECURITY AGREEMENT				25
	4.1	Grant of Security Interest		25
	4.2	Perfection of Lender’s Security Interest; Duty of Care.		26
	4.3	Power of Attorney.		27
	4.4	Lender’s Additional Rights Regarding Collateral		28
ARTICLE 5 REPRESENTATIONS AND WARRANTIES				28
	5.1	Existence and Power		28
	5.2	Authorization; No Contravention		28
	5.3	Governmental Authorization		29
	5.4	Binding Effect		29
	5.5	Litigation		29
	5.6	No Default		29
	5.7	ERISA Compliance		29
	5.8	Taxes		29
	5.9	Financial Condition.		30
	5.10	Environmental Matters		30
	5.11	Solvency		30
	5.12	Labor Relations		30
	5.13	Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock		30

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