Exhibit 10.5

 

SECURED PROMISSORY NOTE

 

Up to $4,525,000 As of September 30, 2020

 

1. Principal and Interest.

 

FOR VALUE RECEIVED, 1847 Cabinet Inc., a Delaware corporation (“Borrower”),
hereby unconditionally promises to pay to the order of 1847 Holdings LLC, a
Delaware limited liability company (together with its permitted successors and
assigns, “Lender”), at Lender’s address as designated in writing by the holder
of this Secured Promissory Note (“Note”), the sum of the principal amount of up
to Four Million, Five Hundred Twenty Five Thousand and No/100 U.S. DOLLARS
($4,525,000), with interest thereon, pursuant to the terms of this Note.

 

In the event Borrower requests funds from Lender in excess of the Commitment (as
hereinafter defined), and Lender advances such funds to Borrower, the amounts
funded in excess of the Commitment shall be deemed, as of the date such funds
are advanced, part of the outstanding principal balance of this Note, repayable
hereunder, until repaid for all purposes hereunder.

 

The “Obligations” (as hereinafter defined) are being guaranteed by Borrower’s
wholly-owned subsidiary, Kyle’s Custom Wood Shop, Inc. (the “Guarantor”), which
guaranty is secured by all of the assets of Guarantor, all as provided in
Section 3 below.

 

(a) Defined Terms. Unless otherwise defined herein, capitalized terms used
herein that are defined in the UCC shall have the meanings assigned to them in
the UCC, however, if a term is defined in Article 9 of the UCC differently than
in another Article of the UCC, the term has the meaning specified in Article 9.
In addition, the following terms shall have the following meanings:

 

(i) “Business Day” means (a) with respect to any borrowing or payment or
interest rate provision related to an Advance (as hereinafter defined) or the
Note, a day (other than a Saturday or Sunday) on which banks generally are open
in New York, New York and for the conduct of substantially all of their
commercial lending activities and (b) for all other purposes, a day other than a
Saturday, Sunday or any other day on which national banking associations are
authorized to be closed.

 

(ii) “Collateral” means, with respect to Borrower and the Guarantor, all of
Borrower’s and Guarantor’s present and future right, title and interest in and
to any and all of the personal property of Borrower and Guarantor whether such
property is now existing or hereafter created, acquired or arising and wherever
located from time to time, including without limitation: (1) accounts; (2)
chattel paper; (3) goods; (4) inventory; (5) equipment; (6) fixtures; (7)
instruments; (8) investment property; (9) documents; (10) commercial tort
claims; (11) deposit accounts; (12) letter-of-credit rights; (13) general
intangibles; (14) supporting obligations; and (15) all proceeds and products of
the foregoing.

 

(iii) “Commitment” means the maximum unpaid principal amount of Advances which
may from time to time be outstanding hereunder, being Four Million, Five Hundred
Twenty Five Thousand and No/100 U.S. DOLLARS ($4,525,000) and, as the context
may require, the agreement of Lender to make Advances to Borrower subject to the
terms and conditions of this Note.

 

 

 

 

(iv) “Termination Date” means the earliest of (i) the Maturity Date (as
hereinafter defined), or (ii) the date on which the Commitment is terminated
pursuant to Section 3(j)(i) hereof.

 

(b) The Commitment; Advances; Use of Proceeds.

 

(i) Subject to the terms and conditions hereof and in reliance upon the
representations, covenants and warranties of Borrower herein, Lender agrees to
make advances of funds (each an “Advance” and, collectively, the “Advances”) to
Borrower from time to time from the date hereof until the Termination Date, in
an aggregate principal amount at any one time outstanding not to exceed the
Commitment. Borrower acknowledges that Advances, once advanced pursuant to this
Section 1 and repaid pursuant to this Note are not eligible to be subsequently
re-borrowed by Borrower.

 

(ii) Notwithstanding anything to the contrary in this Note, upon Borrower’s
request, Lender may, in its sole discretion, advance funds under this Note in
excess of the Commitment, and the amounts funded in excess of the Commitment
shall be deemed, as of the date such funds are advanced, part of the outstanding
principal balance of this Note for all purposes hereunder and due hereunder
until repaid.

 

(iii) Borrower shall use the loan proceeds available under the Commitment to pay
the cash portion of the purchase price for the acquisition of Guarantor and
otherwise solely for proper business purposes of Borrower, including acquisition
expenses, working capital and general corporate purposes.

 

(c) Borrowing Procedures.

 

(i) Borrower’s Request. Any request by Borrower for an Advance shall be in
writing, or by telephone promptly confirmed in writing, and must be given so as
to be received by Lender no later than 11:00 a.m., New York City time three (3)
Business Days before the date of the requested Advance. Subject to the
foregoing, any request by Borrower for an Advance that is received by Lender
after 11:00 a.m., New York City time will be deemed to be made as of the
following Business Day. Each request for an Advance shall specify the borrowing
date (which shall be a Business Day), Borrower’s instructions (if any) regarding
the Advance, the purpose for the Advance, and supporting documentation. Unless
Lender determines that any applicable condition specified in Section 1(c)(iv)
has not been satisfied, Lender will make the amount of the requested Advance
available to Borrower as provided in Section 1(c)(ii).

 

(ii) Payments of Advances. Lender shall pay amounts, in whole or part, under any
Advance requested by Borrower either directly to Borrower, or, on behalf of
Borrower, to any third party due such funds from Borrower as specified in
Borrower’s written request to Lender for such Advance, as Lender shall determine
in its sole discretion, and any such direct third party payment shall be deemed
made hereunder to Borrower and shall constitute outstanding principal hereunder.

 

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(iii) Recordation. The date (the “Funding Date”) and amount of each Advance and
each repayment and prepayment of principal thereof shall be endorsed by Lender
on the Schedule of Advances attached hereto. Lender may provide Borrower with
statements of account with respect to this Note on a quarterly basis, or such
other periodic basis Lender deems appropriate from time to time. The aggregate
unpaid principal amount so recorded shall be prima facie evidence of the
principal amount owing and unpaid on the Note.

 

(iv) Conditions Precedent to Advances. The obligation of Lender to make any
Advance hereunder shall be subject to the satisfaction of the following
conditions precedent:

 

(1) Lender shall have received Borrower’s request for such Advance as required
by Section 1(c)(i) hereof, and said request shall be for a proper business
purpose of Borrower consistent with the use of proceeds provisions of this Note;
and

 

(2) As of the date of such Advance, and after giving effect thereto:

 

(A) no Event of Default (as hereinafter defined) exists, and no event or
condition exists which with notice, lapse of time and/or the making of the
Advance would constitute an Event of Default;

 

(B) the representations and warranties of Borrower and Guarantor contained
herein are true and correct on, and as of, such date; and

 

(C) all of the covenants, conditions and agreements of Borrower and Guarantor in
this Note, and all of the requirements of this Note with respect to the Advance,
have been complied with.

 

(d) The unpaid principal balance of this Note shall bear interest at the rate of
sixteen percent (16%) per annum. Interest shall accrue for each and every date
on which any indebtedness remains outstanding hereunder and shall be computed on
the daily outstanding principal balance hereunder based on a three hundred
sixty-five (365) day year. Interest shall be cumulative and any unpaid accrued
interest will compound on each anniversary date of this Note. Interest shall be
due and payable in accordance with the terms of Section 1(e) below. All payments
of interest and principal shall be made in lawful money of the United States of
America no later than 12:00 PM on the date on which such payment is due by
cashier’s check, certified check or by wire transfer of immediately available
funds to Lender’s account at a bank specified by Lender in writing to Borrower
from time to time. All payments made hereunder shall be applied: first, to the
payment of any fees or charges outstanding hereunder; second, to accrued
interest; and third, to the payment of the principal amount outstanding under
this Note.

 

(e) Interest shall be due and payable in arrears to Lender on January 15, April
15, July 15 and October 15 (each, a “Quarterly Payment Date”), commencing
January 15, 2021.

 

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(f) Borrower shall pay to Lender the principal balance of the outstanding amount
due hereunder together with any accrued and unpaid interest and other amounts,
if any, owed hereunder ON DEMAND, as herein provided. Lender may demand payment
in full of this Note, at any time, even if Borrower has complied with all of the
terms of this Note; and this Note shall be due in full, without demand, upon the
third party sale of all or substantially all the assets and business of Borrower
or the third party sale or other disposition of any capital stock of Borrower.
The date on which Lender declares this Note to be, or this Note otherwise
becomes, due shall be the Maturity Date (the “Maturity Date”). In the event
payment of principal or interest due under this Note is not made when due,
giving effect to any grace period which may be applicable, or in the event of
any other Default (as hereinafter defined), the outstanding principal balance
hereof shall from the date of Default immediately bear interest at the rate of
five percent (5%) above the then applicable interest rate for so long as such
Default continues.

 

(g) This Note may be prepaid at any time without penalty. All amounts paid
toward the satisfaction of this Note shall be applied: first, to the payment of
amounts, if any, owed hereunder, other than interest and principal; second, to
the payment of accrued and unpaid interest hereunder; and third, to the payment
of principal hereunder.

 

(h) Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension will be taken into account in calculating the
amount of interest payable under this Note.

 

(i) If at any time and for any reason whatsoever, the interest rate payable on
this Note shall exceed the maximum rate of interest permitted to be charged by
Lender to Borrower under applicable law, such interest rate shall be reduced
automatically to the maximum rate of interest permitted to be charged under
applicable law.

 

(j) Upon payment in full of all principal and interest payable hereunder, this
Note shall be surrendered to Borrower for cancellation.

 

(k) For purposes of this Note, “Obligations” means and includes all loans,
advances, debts, liabilities and obligations, howsoever arising, owed by
Borrower to Lender and evidenced by this Note, including, all principal,
interest, fees, charges, expenses, attorneys’ fees and costs and accountants’
fees and costs chargeable to and payable by Borrower hereunder, whether direct
or indirect, absolute or contingent, due or to become due, and whether or not
arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended from time to time
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding.

 

2. Covenants. Without the prior written consent of Lender, Borrower shall not
incur indebtedness other than (i) indebtedness incurred in connection with the
acquisition of Guarantor, (ii) trade accounts payable incurred in the ordinary
course of business or (iii) other indebtedness either reflected in Borrower’s
latest balance sheet delivered to Lender prior to the date hereof or otherwise
disclosed to Lender in writing prior to the date hereof.

 

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3. Guaranty, Security and Related Matters.

 

(a) To induce Lender to make the loan to Borrower under this Note, Guarantor
hereby absolutely, unconditionally and irrevocably guarantees to Lender the due
and punctual payment, observance, performance and discharge of all of the
Obligations of Borrower under this Note if and when due. Guarantor agrees that
Lender may proceed against Guarantor separately or collectively with Borrower
without prejudicing or waiving any of Lender’s rights under any other
obligations or under this Note. In the event Borrower fails to perform, satisfy
or observe the terms of this Note required to be performed, satisfied or
observed by Borrower, Guarantor will promptly and fully perform, satisfy and
observe such obligations in the place of Borrower. Guarantor shall pay,
reimburse and indemnify Lender for any and all reasonable attorneys’ fees
arising or resulting from the failure of Borrower to perform, satisfy or observe
any of the terms of this Note. The guarantee described in this Section 3(a) (the
“Guarantee”) is binding upon Guarantor and Guarantor’s successors in interest
and assigns of Guarantor and inures to the benefit of Lender and it successors
and assigns.

 

(b) As security for the Obligation and the Guarantee, each of Borrower and
Guarantor hereby pledges to Lender, and grants to Lender, a security interest in
and to the Collateral owned by it. Each of Borrower and Guarantor hereby agrees
not to transfer or assign any of the Collateral as long as any Obligations
remain unpaid. Lender shall have all of the rights, powers and privileges of a
secured party under the Delaware Uniform Commercial Codes in force and effect
from time to time with respect to the security interest granted hereunder.

 

(c) Each of Borrower and Guarantor hereby irrevocably authorizes Lender at any
time and from time to time to file in any relevant jurisdiction any financing
statements (including fixture filings) and amendments thereto that contain the
information required by Article 9 of the UCC of each applicable jurisdiction for
the filing of any financing statement or amendment relating to the Collateral.

 

(d) Each of Borrower and Guarantor represents and warrants to Lender that, on
the date hereof, any and all financing statements, agreements, instruments and
other documents necessary to perfect the security interests granted by Borrower
and Guarantor to Lender in respect of the Collateral and, to the extent
necessary or appropriate, to the extent requested and delivered to Borrower or
Guarantor by Lender, have been duly executed and delivered to Lender. Each of
Borrower and Guarantor agrees that they will maintain the security interests
created by this Note in the Collateral as a perfected security interest.

 

(e) Each of Borrower and Guarantor shall take such further actions, and execute
and/or deliver to Lender such additional financing statements, amendments,
assignments, agreements, supplements, powers and instruments, as Lender may in
its judgment deem necessary or appropriate in order to perfect, preserve and
protect the security interests in the Collateral as provided herein and the
rights and interests granted to Lender hereunder, and enable Lender to exercise
and enforce its rights, powers and remedies hereunder with respect to any
Collateral. If a Default has occurred and is continuing, Lender may institute
and maintain, in its own name, such suits and proceedings as Lender may deem to
be necessary or expedient to prevent any impairment of the security interests in
or the perfection thereof in the Collateral. Each of Borrower and Guarantor
shall cooperate with all of the foregoing at their sole cost and expense.

 

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(f) Each of Borrower and Guarantor represents and warrants that he or it has
good title to all of its or his Collateral, and none of such property is subject
to any lien, claim, option or right of others, except for those liens identified
on Exhibit A hereto and the security interest granted to Lender hereunder. This
Section 3 is effective to create in favor of Lender, a legal, valid and
enforceable security interest in the Collateral and the proceeds thereof.

 

(g) Each of Borrower and Guarantor shall, jointly and severally, at their sole
cost and expense, defend title to the Collateral and the security interest and
lien granted to Lender with respect thereto against all claims and demands of
all persons at any time claiming any interest therein adverse to Lender.

 

(h) Neither Borrower nor Guarantor, as applicable, shall change (i) his or its
legal name, identity, type of organization or corporate structure; (ii) the
location of Borrower’s chief executive office or Borrower’s principal place of
business, except with not less than thirty (30) days written notice to Lender;
(iii) Borrower’s organizational identification number (if any); or (iv)
Borrower’s jurisdiction of organization, with not less than thirty (30) days
written notice to Leader, (in each case, including by merging with or into any
other entity, reorganizing, organizing, dissolving, liquidating, reincorporating
or incorporating in any other jurisdiction).

 

(i) In the event that the proceeds of any casualty insurance claim are paid to
Borrower or Guarantor in respect of the Collateral, such net cash proceeds shall
be used to repair or replace Borrower’s damaged or lost property within 180 days
of such damage or loss, or in the event that such repair or replacement is not
feasible following the casualty, such net cash proceeds shall instead be held in
trust for the benefit of Lender and immediately after receipt thereof shall be
paid to Lender for application in accordance with this Note.

 

(j) If any Default shall have occurred and be continuing:

 

(i) Lender shall have no further obligation to and may then forthwith cease
advancing monies or extending credit to or for the benefit of Borrower under
this Note and shall not be obligated to extend any advance monies or extend
credit to or for the benefit of Lender under the Commitment.

 

(ii) Lender may exercise, without any other notice to or demand upon Borrower
and/or Guarantor, in addition to the other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party upon default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may, in compliance with applicable law:

 

(A) with written notice specified below, sell, resell, assign and deliver or
grant a license to use or otherwise dispose of the Collateral or any part
thereof, in one or more parcels at public or private sale (in which Borrower
and/or Guarantor and/or any of their stockholders, creditors or designees shall
be entitled to participate), for cash, on credit or for future delivery, and
upon such other terms as are commercially reasonable; and

 

(B) exercise any and all rights and remedies of Lender under or in connection
with the Collateral, or otherwise in respect of the Collateral.

 

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(k) Lender shall give at least 10 days’ written notice (which notice can run
concurrently with any required notice periods as to default set forth herein) to
Borrower and/or Guarantor, as the case may be, of the time and place of any
public or private sale of Collateral. At any sale of the Collateral, if
permitted by applicable law, Lender may be the purchaser, licensee, assignee or
recipient of the Collateral or any part thereof and shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold, assigned or licensed at such sale, to
use and apply any of the obligations under this Note as a credit on account of
the purchase price of the Collateral or any part thereof payable at such sale.
To the extent permitted by applicable law, each of Borrower and Guarantor waives
all claims, damages and demands it may acquire against Lender arising out of the
exercise by it of any rights hereunder. Each of Borrower and Guarantor hereby
waives and releases to the fullest extent permitted by law any right or equity
of redemption with respect to the Collateral after any sale hereunder, and all
rights, if any, of marshaling the Collateral and any other security for the
obligations under the Note or otherwise, in accordance with applicable law.
Lender shall not be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing, nor shall it be under any
obligation to take any action with regard thereto. Lender shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale, may, without further
notice, be made at the time and place to which it was so adjourned. Lender shall
not be obligated to clean-up or otherwise prepare the Collateral for sale.

 

(l) Upon the exercise by Lender of its remedies hereunder, any proceeds received
by Lender in respect of any realization upon any Collateral shall be applied
pursuant to this Note. Guarantor and Borrower shall remain liable hereunder for
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the obligations under this Note and the fees
and other charges of any attorneys employed by Lender to collect such
deficiency.

 

(m) Upon payment in full of all Obligations, the security interest in the
Collateral shall be terminated and Lender will, at Borrower’s or Guarantor’s
request and expense, take all necessary action and make such appropriate filings
as required to terminate the security interest.

 

4. Attorney Fees, Expenses and Costs of Collection. If this Note or any
installment of principal or interest is not paid when due, Borrower agrees to
pay all costs and expenses of collection, including without limitation,
reasonable attorneys’ fees, court costs, and all costs and expenses in
connection with the protection or realization of the Collateral and the payment
and performance of each of the Obligations, whether or not suit is filed hereon
or thereon. Such costs and expenses shall include, without limitation, (i) all
costs, expenses and reasonable attorneys’ fees incurred by Lender in connection
with any insolvency, bankruptcy, receivership or other similar proceedings
involving Borrower, and (ii) all costs, expenses and reasonable attorney’s fees
incurred by Lender in connection with all negotiations, documentation and other
actions relating to any work-out, compromise, settlement or resolution of
Lender’s claim. In addition thereto, Borrower agrees that it shall reimburse the
Lender on demand for all reasonable out-of-pocket costs, expenses and fees
(including reasonable expenses and fees of its outside counsel) incurred by
Lender in connection with the transactions contemplated hereby including the
negotiation, documentation and execution of this Note.

 

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5. Notices. All notices and other communications given or made pursuant to this
Note shall be in writing and shall be deemed effectively given upon the earlier
of actual receipt or (a) personal delivery to the party to be notified, (b) when
sent, if sent by electronic mail or facsimile during normal business hours of
the recipient, and if not sent during normal business hours, then on the
recipient’s next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d)
one (1) business day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the respective
parties at their address as set forth on the signature page of this Note.

 

6. Default. Upon the occurrence of any of the following events (each, a
“Default”) and at any time thereafter during the continuance of such Default,
Lender may at its option, by written notice to Borrower (x) declare the entire
principal amount of this Note, together with all accrued interest thereon and
all other amounts payable hereunder, immediately due and payable and/or (y)
exercise any or all of its rights, powers or remedies under this Note or under
applicable law; provided, however that, if an event of Default described in
clause (a) below shall occur, the principal of and accrued interest on this Note
shall become immediately due and payable without any notice, declaration or
other act on the part of Lender:

 

(a) (i) Borrower or Guarantor commences any proceeding in bankruptcy or for
dissolution, liquidation, winding-up, composition or other relief under state or
federal bankruptcy laws; (ii) such proceedings are commenced against Borrower or
Guarantor, or a receiver or trustee is appointed for Borrower or Guarantor or a
substantial part of its or his property, and such proceeding or appointment is
not dismissed or discharged within thirty (30) days after its commencement;
provided, that all interest shall continue to accrue as set forth above until
all amounts owed under this Note are paid in cash in full; (iii) any assignment
for the benefit of the creditors of Borrower or Guarantor;

 

(b) Borrower or Guarantor fails to pay when due any principal, interest or other
amounts owing under this Note, which failure to pay is not cured within five (5)
days from the delivery of notice thereof by the Lender;

 

(c) Any representation or warranty made by Borrower or Guarantor in this Note is
incorrect in any material respect on the date as of which such representation or
warranty was made and is not cured, to the extent curable, within ten (10) days
from the delivery of notice thereof by the Lender;

 

(d) Borrower or Guarantor shall default in the observance or performance of any
covenant or agreement contained in this Note (other than as provided in clause
(b) of this Section), and such default shall continue unremedied for a period of
ten (10) days from the delivery of notice thereof by Lender;

 

(e) Borrower or Guarantor fails to pay when due any of its or his indebtedness
(other than indebtedness under this Note) or any interest or premium thereon
when due (whether by scheduled payment hereunder, demand or otherwise) and such
failure continues after the applicable grace period, if any, specified in the
agreement or instrument relating to such indebtedness, it being understood that
for purposes of this subsection “indebtedness” shall mean financial indebtedness
and not ordinary course accounts payable; or

 

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(f) A judgment or decree is entered against Borrower or Guarantor and such
judgment or decree has not been vacated, discharged, stayed or bonded pending
appeal within thirty (30) days from the entry thereof.

 

7. Waivers. Each of Borrower and Guarantor hereby irrevocably and
unconditionally (a) except with respect to notices required under Section 6(b),
waives presentment, demand for performance, diligence in enforcement, notice of
non-performance, protest, notice of protest and notice of dishonor and all other
protests or notices to the full extent permitted by applicable laws or
regulations; and (b) waives any right Borrower or Guarantor may have to require
Lender to exhaust any of the Collateral, or pursue a particular remedy to the
exclusion of others. No delay on the part of Lender in exercising any right
hereunder shall operate as a waiver of such right or any other right nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

 

8. Confidentiality. Borrower and Guarantor shall, and shall cause its or his
affiliates, employees, officers, directors, and other agents (the
“Representatives”) to hold in confidence any and all information, whether
written or oral, concerning the terms of this Note (including the existence of
this Note), the discussions and negotiations between the parties contemplating
this Note, or any information regarding the Lender obtained during the
discussions and negotiations of this Note; provided, however, nothing in this
Section 8 shall prohibit Borrower, Guarantor or any of their Representatives
from disclosing or sharing any information regarding the terms of this Note with
Borrower’s investors and potential investors, existing lenders, and professional
advisors, including without limitation its accountants and attorneys, or from
enforcing or defending Borrower’s or Guarantor’s rights pursuant to this Note.

 

9. Choice of Law; Jurisdiction; Venue; Waiver or Jury Trial. This Note is being
delivered in and shall be construed in accordance with the laws of the State of
New York, without regard to the conflicts of law provisions thereof. Each of
Borrower and Guarantor, by its or his execution hereof, hereby irrevocably
submits to the in personam jurisdiction of the state courts of the State of New
York and of the United States District Court for the Southern District of New
York, for the purpose of any suit, action or other proceeding arising out of or
based upon this Note, and such courts shall be the exclusive venue for
resolution of any disputes arising from or relating to this Note, the loan made
hereunder, or security interest granted herein. EACH OF BORROWER AND GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT OR HE MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.

 

10. Amendment and Waiver. The provisions of this Note may be modified or amended
only in a writing executed by Borrower, Guarantor and Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.

 

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11. Rights and Remedies. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies that Lender may otherwise
have.

 

12. Severability; Effectiveness. If one or more provisions of this Note are held
to be unenforceable under applicable law, such provision(s) shall be excluded
from this Note, and the balance of this Note shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms. This Note may be signed in any number of counterparts, each of which is
an original and all of which taken together form one single document. Delivery
of an executed counterpart of a signature page to this Note by facsimile or in
electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a
manually executed counterpart of this Note.

 

13. Successors and Assigns. This Note may be assigned, transferred or negotiated
by Lender at any time to any third party without notice to or consent by
Borrower. Neither Borrower nor Guarantor may assign or transfer this Note or any
of its rights hereunder without the prior written consent of Lender, which
consent may be withheld for any or no reason whatsoever. This Note shall inure
to the benefit of and be binding upon the parties hereto and their permitted
assigns.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have caused this Secured Promissory Note to
be executed as of the date first set forth above.

 

  LENDER:       1847 Holdings LLC       By: /s/ Ellery W. Roberts     Name:
Ellery W. Roberts     Title: Chief Executive Officer         BORROWER:      
1847 Cabinet Inc.       By: /s/ Kenneth Yuan     Name: Kenneth Yuan     Title:
Chief Executive Officer         GUARANTOR:       Kyle’s Custom Wood Shop, Inc.  
      By:   /s/ Kenneth Yuan     Name: Kenneth Yuan     Title: Chief Executive
Officer

  

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EXHIBIT A

 

EXISTING LIENS

 

None