Exhibit 10.4

 

1847 HOLDINGS LLC

 

STOCK OPTION AGREEMENT

 

This STOCK OPTION AGREEMENT (this “Agreement”), dated as of May 11, 2020, is
entered into by and between 1847 Holdings LLC, a Delaware limited liability
company (the “Company”), and Robert D. Barry (the “Optionee”).

 

BACKGROUND

 

Pursuant to an agreement between the Company and the Optionee, the Company
agreed to grant a stock option to the Optionee for the purchase of 30,000 the
Company’s Common Shares.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises, mutual covenants herein set
forth and other good and valuable consideration, subject to the terms and
conditions herein, the Company and the Optionee hereby agree as follows:

 

1.Grant of Option.

 

Subject to the terms and conditions herein, the Company hereby grants to the
Optionee an option (the “Option”) to purchase Thirty Thousand (30,000) of its
Common Shares (the “Option Shares”), at an exercise price of $2.50 per share
(the “Exercise Price”), as may be adjusted from time to time as provided in this
Agreement.

 

2.Exercise of the Option.

 

(a) Subject to adjustments as provided in Section 6 herein, the Option shall be
cumulatively exercisable. The Option is fully vested and immediately
exercisable.

 

(b) The Option shall expire on May 11, 2025, subject to earlier termination as
provided herein.

 

3.Rights of Holder.

 

The Optionee shall not have any rights to dividends or any other rights of a
stockholder with respect to any Option Shares until such shares shall have been
issued to him (as evidenced by the appropriate entry on the transfer books of
the Company) upon purchase of such shares upon exercise of the Option.
Furthermore, nothing contained in this Agreement shall confer upon the Optionee
any right to be in the employ of the Company or its subsidiaries beyond what is
called for in the Optionee’s employment agreement, if any.

 

4.Non-Transferability of Option.

 

This Option shall not be transferable other than by will or by the laws of
descent and distribution, and may be exercised during the Optionee’s lifetime
only by him.

 

 

 

 

5.Representations and Warranties of Optionee; Investor Qualification;
Restrictions on Sales.

 

The Option and, upon exercise of the Option, the Purchased Shares, as defined in
Section 8 (together, the “Shares”) are being acquired by the Optionee for his
account, for investment purposes and not with a view to the sale or distribution
of all or any part of the Shares, nor with any present intention to sell or in
any way distribute the same, as those terms are used in the Securities Act of
1933, as amended (the “Securities Act”), and the rules and regulations
promulgated thereunder. Optionee has sufficient knowledge and experience in
financial matters so as to be capable of evaluating the merits and risks of
purchasing the Shares. Optionee has reviewed copies of such documents and other
information as Optionee has deemed necessary in order to make an informed
investment decision with respect to its acquisition of the Shares. Optionee
understands that the Shares may not be sold, transferred or otherwise disposed
of without registration under the Securities Act or the availability of an
exemption therefrom, and that in the absence of an effective registration
statement covering the Shares or an available exemption from registration under
the Securities Act, the Shares must be held indefinitely. Further, Optionee
understands and has the financial capability of assuming the economic risk of an
investment in the Shares for an indefinite period of time. Optionee has been
advised by the Company that Optionee will not be able to dispose of the Shares,
or any interest therein, without first complying with the relevant provisions of
the Securities Act and any applicable state securities laws. Optionee
understands that the provisions of Rule 144 promulgated under the Securities
Act, permitting the routine sales of the securities of certain issuers subject
to the terms and conditions thereof, are not currently, and may not hereafter
be, available with respect to the Shares. Optionee acknowledges that the Company
is under no obligation to register the Shares or to furnish any information or
take any other action to assist the undersigned in complying with the terms and
conditions of any exemption which might be available under the Securities Act or
any state securities laws with respect to sales of the Shares in the future.
Optionee is an “Accredited Investor” as defined in rule 501 (a) of Regulation D
of the Securities Act.

 

6.Adjustments.

 

(a) Adjustments by the Company. In the event of a stock dividend, stock
split-up, share combination, exchange of shares, recapitalization, merger,
consolidation, acquisition or disposition of property or shares, reorganization,
liquidation or other similar changes or transactions, by the Company during the
term of the Option, the Board of Directors of the Company shall make such
adjustment of the number and class of shares then covered by the Option, or of
the Exercise Price, or both, whose determination shall be conclusive. To the
extent practicable, the Company shall give the Optionee prior notice of any such
event, provided that the failure by the Company to give such notice shall not
subject the Company to any liability herein.

 

(b) Adjustments Due to Merger, Consolidation, Reorganization, Asset Sale,
Liquidation, etc.

 

(i) If the Company shall be the surviving business entity in any reorganization,
merger, consolidation, etc. of the Company with one or more other corporations,
any then outstanding Option shall pertain to and apply to the securities to
which a holder of the number of Common Shares subject to such Option would have
been entitled immediately following such reorganization, merger, consolidation,
etc. with a corresponding proportionate adjustment of the Exercise Price as to
which such Option may be exercised so that the aggregate Exercise Price as to
which such Option may be exercised shall be the same as the aggregate Exercise
Price as to which such Option may be exercised for the shares remaining subject
to the Option immediately prior to such reorganization, merger, consolidation,
etc.

 

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(ii) In the event of a merger or consolidation in which the Company is not the
surviving business entity, or sale of all or substantially all of the assets of
the Company in which outstanding Common Shares are exchanged for securities,
cash or other property of any other corporation or business entity or in the
event of a liquidation of the Company (collectively, a “Corporate Transaction”),
the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding Options: (A)
provide that such Options shall be assumed, or equivalent Options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof); (B) upon written notice to the Optionee, provide that all unexercised
Options will terminate immediately prior to the consummation of such transaction
unless exercised by the Optionee within a specified period following the date of
such notice; or (C) in the event of a Corporate Transaction under the terms of
which holders of the Common Shares of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the Corporate Transaction
(the “Transaction Price”), make or provide for a cash payment to the Optionee
equal to the difference between the Transaction Price times the number of Common
Shares subject to such outstanding Options (to the extent then exercisable at
prices not in excess of the Transaction Price) and the aggregate Exercise Price
of all such outstanding Options in exchange for the termination of such Options.

 

7.Reservation of Shares.

 

The Company shall at all times during the term of the Option reserve and keep
available such number of Common Shares or such other class of stock then subject
to the Option as shall be sufficient to satisfy the requirements of this
Agreement. The Company shall list such Common Shares on the national securities
exchange or automated quotation system on which the Company’s Common Shares are
then listed.

 

8.Exercise Procedure.

 

(a) Procedure. The Optionee may exercise the Option, at any time or from time to
time as provided herein, by delivering to the Company a written notice duly
signed by the Optionee stating the number of Option Shares that the Optionee has
elected to purchase and accompanied by payment in an amount equal to the full
purchase price for the shares to be purchased (the “Purchased Shares”). The
notice may be in form of the “Exercise of Option to Purchase Shares” attached
hereto. The payment may either be in cash or by check or shares of the Company’s
Common Shares with a fair market value equal to the exercise price on the date
the Option is exercised, or through a combination of cash or shares. For
purposes of the foregoing, “fair market value” of the Common Shares shall be
determined as of the last business day for which the prices or quotes are
available prior to the date the particular Options are exercised and shall mean
(i) the last reported sale price (on that date) of the Common Shares on the
principal national securities exchange on which the Common Shares are traded; or
(ii) the average of the closing bid and asked prices last quoted (on that date)
by an established quotation service for over-the-counter securities, if the
Common Shares are not reported on a national securities exchange. However, if
the Common Shares are not then publicly traded, the “fair market value” shall be
deemed to be the fair value of the Common Shares as determined by the Company’s
Board of Directors after taking into consideration all factors which it deems
appropriate. Following receipt by the Company of such notice of exercise and
full payment, the Company shall issue, as soon as practicable, a stock
certificate for the Purchased Shares in the name as designated by the Optionee
and deliver the certificate to the Optionee.

 

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(b) Compliance. Notwithstanding the foregoing, the Company shall not be required
to issue or deliver the stock certificate pursuant to Section 8(a) hereof until
it has complied with all requirements of the Securities Act, the Securities
Exchange Act of 1934, as amended, any securities exchange or automated quotation
system on which the Company’s Common Shares may then be listed, and all
applicable state laws in connection with the issuance of the Option Shares or
their listing on said securities exchange or system. When the Optionee exercises
any portion of this Option, the Optionee shall execute and deliver to the
Company an investment letter in a form satisfactory to the Company containing
such representations of as may be requested by the Company in order for it to
comply with the applicable requirements of federal and state securities laws.
This requirement shall not apply if the Company has registered the issuance of
the Option Shares under federal and state securities laws.

 

(c) Legend. Each certificate for the Purchased Shares shall bear the following
legend:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.”

 

9.Notices.

 

Each notice relating to this Agreement shall be in writing and delivered in
person or by facsimile, e-mail or certified mail to the following addresses:

 

If to the Company:

 

590 Madison Avenue, 21st Floor

New York, NY 10022

Attention: Chief Executive Officer

Email:

 

If the Optionee:

 

_____________________

 

_____________________

 

or to such other address as either party hereto may hereinafter duly give to the
other.

 

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10.Binding.

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their successors, assigns, heirs and administrators.

 

11.Entire Agreement.

 

This Agreement constitutes the entire agreement between the parties hereto with
respect to the matters herein, and cannot be amended, modified or terminated
except by an agreement in writing executed by the parties hereto.

 

12.Governing Law.

 

This Agreement shall be construed in accordance with and governed by the laws of
the State of Delaware.

 

13.Counterparts.

 

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

 

[Signature page follows]

 

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

 

  1847 HOLDINGS LLC         By: /s/ Ellery W. Roberts   Name:  Ellery W. Roberts
  Title: Chief Executive Officer         OPTIONEE       /s/ Robert D. Barry  
Robert D. Barry

 

 

 

 

Exercise of Option To Purchase Shares

 

To: 1847 Holdings LLC

 

The undersigned hereby exercises the within Option for the purchase of ______
shares (the “Purchased Shares”) of the Common Shares of 1847 Holdings LLC (the
“Company”) granted under a Stock Option Agreement, dated as of May 11, 2020, and
herewith makes payment of the purchase price by the delivery of $_______. In the
event the Purchased Shares are not registered under the Securities Act of 1933,
as amended, the undersigned shall provide such representations as may be
required by the Company to fulfill any exemptions that may be sought under said
Act. Kindly issue the certificate for the Purchased Shares in accordance with
the instructions given below:

 

    Signature       Instructions for issuance of stock:           Name          
    Address           Social Security Number