Document:

Exhibit 10.11

 

Execution Version

 

NOTE PURCHASE AGREEMENT

 

THIS NOTE PURCHASE AGREEMENT,
dated as of October 8, 2021 (this “Agreement”), is entered into by and among 1847 HOLDINGS LLC, a Delaware limited
liability company (the “Issuer”), with its principal executive office at 590 Madison Ave., 21st Floor, New
York, NY 10022 (the “Principal Office”), each of the parties listed on the signature page as Guarantor (each a “Guarantor”
and collectively, the “Guarantors”; the Issuer and the Guarantors are hereinafter sometimes referred to individually
as an “Obligor” and collectively as the “Obligors”), the purchasers identified on the signature
pages hereof (such purchasers, together with their respective successors and permitted assigns, each a “Purchaser”
and, collectively, the “Purchasers”), and LEONITE CAPITAL LLC, a Delaware limited liability company, as administrative
agent for the Purchasers (together with its successors and permitted assigns in such capacity, the “Agent”).

 

RECITALS

 

A. The
Issuer seeks to sell to Purchasers certain Secured Convertible Promissory Notes, each dated as of the date hereof (collectively, as each
may be amended, restated, or otherwise modified from time to time, the “Notes”), in the aggregate original principal
amount of Twenty-Four Million Eight Hundred Sixty Dollars ($24,860,000).

 

B. The
obligations of the Issuer under this Agreement are (i) guaranteed by the Guarantors pursuant to that certain Guaranty Agreement (as defined
herein) and (ii) secured by liens on and security interests in all or substantially all assets of the Issuer and the Guarantors, pursuant
to the Security Agreement (as defined herein) and the other Transaction Documents.

 

NOW THEREFORE, in consideration
of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:

 

1. Definitions.
In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified:

 

“Affiliate”
means, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by,
or is under common Control with, such Person. For the purposes of this definition, “Control” shall mean the power, directly
or indirectly, either to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of a Person or (ii) direct or cause the direction of the management and policies of a Person, whether through
the ability to exercise voting power, by control or otherwise. The terms “Control”, “Controlled by”, and “under
common Control with” have the meanings correlative thereto.

 

“Agent-Related Persons”
means the Agent, together with its Affiliates and their respective directors, officers, agents, employees, advisors, shareholders and
attorneys.

 

“Business Day”
means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York are authorized or obligated
to close.

 

     

     

    

 

“Change of Control”
means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than
the holders of the Issuer’s Equity Interests as of the Closing Date, shall become, or obtain rights (whether by means of warrants,
options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of more than 50% of the ordinary voting power for the election of directors of the Issuer (determined on a fully
diluted basis); or (b) at any time, the Issuer shall cease to own and control, of record and beneficially, directly or indirectly,
100% of the outstanding Equity Interests of each other Obligor free and clear of all Liens (except Liens created by the Transaction Documents).

 

“Closing Date”
means the date of this Agreement.

 

“Closing Date Acquisitions”
means the acquisition of High Mountain Door & Trim, Inc. and Sierra Homes, LLC by 1847 Cabinet Inc.

 

“Closing Date Acquisition
Documents” means (i) that certain Securities Purchase Agreement dated as of even date herewith, among 1847 Cabinet Inc., High
Mountain Door & Trim, Inc., Sierra Homes, LLC and the sellers party thereto and any other agreement entered into in connection with
or relating thereto.

 

“Closing Date Redemption”
means the redemption of 2,632,278 Preferred Shares that were issued in connection with the acquisition of Kyle’s Custom Woodshop,
Inc. and up to an additional 869,565 Preferred Shares that were issued in connection with the acquisition of Wolo Manufacturing Corp.
and related companies for aggregate consideration not to exceed $8,054,239.

 

“Collateral”
shall have the meaning provided in the Security Agreement.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common Shares”
means the common shares of the Issuer.

 

“Conversion Shares”
means, collectively, the shares of Common Shares issuable upon conversion of any Note.

 

“EBITDA”
means with respect to any period, an amount equal to the sum of (a) net income of Issuer for such fiscal period, plus (b) in each case
to the extent deducted in the calculation of Issuer’s net income and without duplication, (i) depreciation and amortization for
such period, plus (ii) income tax expense for such period, plus (iii) the aggregate amount of interest required to be paid or accrued
by Issuer during such period on all Indebtedness of the Issuer and its Subsidiaries outstanding during all or any part of such period,
whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest
in respect of any capitalized lease or any synthetic lease, and including commitment fees, agency fees, facility fees, balance deficiency
fees and similar fees or expenses in connection with the borrowing of money, all as determined in accordance with GAAP.

 

“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust
or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or
acquire any of the foregoing.

 

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“Existing Debt”
means all Indebtedness of any Obligor existing on the Closing Date and disclosed on Schedule 1.1.

 

“Fixed Charge Coverage
Ratio” means, for any period, the ratio of (a) EBITDA for such period minus unfinanced capital expenditures for such period
to (b) the sum of (i) interest expense actually paid in cash for such period (excluding for the avoidance of doubt, any paid in kind or
accrued interest), (ii) the aggregate amount of scheduled principal payments made during such period in respect of Indebtedness of Issuer
and its Subsidiaries, (iii) without duplication of any amount set forth in the preceding subclause (ii), the aggregate amount of principal
payments (other than scheduled principal payments) made during such period in respect of Indebtedness of Issuer and its Subsidiaries,
to the extent that such payments reduced any scheduled principal payments that would have become due within one year after the date of
the applicable payment, and (iv) the aggregate amount of taxes paid in cash by Issuer and its Subsidiaries during such period.

 

“GAAP”
means generally accepted accounting principles as in effect from time to time.

 

“Guaranty”
means that certain Guaranty Agreement, dated of even date herewith, by the Guarantors in favor of the Agent for the benefit of the Agent
and the Purchasers, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

 

“Indebtedness”
of any Person means, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase
price of property or services (other than trade payables incurred in the ordinary course of business; provided, that trade payables
overdue by more than 120 days shall be included in this definition except to the extent that any of such trade payables are being disputed
in good faith and by appropriate measures), (iv) all obligations of such Person under any conditional sale or other title retention agreement(s)
relating to property acquired by such Person, (v) all capital lease obligations of such Person, (vi) all obligations, contingent
or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (vii) all guarantees of
such Person of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured
by any lien or security interest on property owned by such Person, whether or not such Indebtedness has been assumed by such Person, and
(ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock
or other equity interests of such Person. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture
in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor.

 

“Information Certificate”
means that certain information certificate, dated of even date herewith, delivered by Issuer and Guarantors to Agent.

 

“Intellectual Property
Security Agreement” means that certain Intellectual Property Security Agreement, dated of even date herewith, by each Subsidiary
that owns material patents or trademarks in favor of the Agent, for the benefit of the Agent and the Purchasers, as the same may be further
amended, restated, supplemented or otherwise modified from time to time.

 

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“Interest Reserve
Account” means an account of the Issuer that is subject to no Liens other than Liens in favor of the Agent, for the benefit
of the Purchasers.

 

“Minimum Interest
Reserve” means unrestricted cash in an amount equal to six (6) months of interest under the Notes.

 

“Leonite Capital”
means Leonite Capital LLC, a Delaware limited liability company.

 

“Leverage Ratio”
means, as of any date of determination, the ratio of (a) all Indebtedness, including New Subsidiary Debt, but excluding any Subordinated
Debt as of such date to (b) EBITDA as of such date for the rolling four fiscal quarter period ending on such date, for Issuer and its
Subsidiaries on a consolidated basis in accordance of GAAP.

 

“Lien”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Management Agreements”
means, collectively, those certain management agreements between the Manager and each Obligor.

 

“Management Fee Subordination
Agreements” means those certain management fee subordination agreements, dated as of even date herewith, by and among each Obligor,
Manager and Agent.

 

“Manager”
means 1847 Partners LLC.

 

“Material Adverse
Effect” means, as reasonably determined by Purchasers, a material adverse effect on (i) the business, assets, operations
or financial or other condition of the Issuer and the Guarantors, taken as a whole; (ii) the ability of the Issuer or the Guarantors
to pay or perform the Obligations in accordance with the terms of this Agreement, any Note, and any other Transaction Document and to
avoid an Event of Default, or an event which, with the giving of notice or the passage of time or both, would constitute an Event of Default,
under this Agreement, any Note, and any other Transaction Document; or (iii) the rights and remedies of the Agent or any Purchaser
under this Agreement, any Note, and any other Transaction Document or any related document, instrument or agreement.

 

“Material Agreement”
means any agreement to which the Issuer, Guarantors or any of their respective Affiliates becomes a party after the date hereof, the termination
of which could reasonably be expected to result in a Material Adverse Effect.

 

“New Subsidiary Debt”
means Indebtedness of a Subsidiary of Issuer that becomes an Obligor after the Closing Date, which Indebtedness is used to finance the
acquisition of assets or a business that will be held by such Subsidiary, as long as (w) such Indebtedness is subject to the Most Favored
Lender Provisions and was incurred after each Purchaser declined in writing to exercise its right of first refusal in respect thereof
pursuant to the terms of the Notes, (x) the applicable holder of such Indebtedness is not an Affiliate of Issuer or any of its Subsidiaries,
(y) the applicable Holder of such Indebtedness enters into a customary subordination agreement with the Agent pursuant to which the Agent
shall have a second Lien upon the assets of the applicable Obligor and otherwise in form and substance acceptable to the Agent and the
Required Purchasers, and (z) no other Obligor has guaranteed such Indebtedness or granted any Liens upon its property to secure such Indebtedness.

 

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“Note”
means the convertible secured promissory notes issued by the Issuer to each Purchaser hereunder, as may be amended, amended and restated,
or modified from time to time.

 

“Obligations”
means and includes all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Issuer to the Agent and the
Purchasers, or any of them, of every kind and description (whether or not evidenced by any note or instrument and whether or not for the
payment of money), now existing or hereafter arising under or pursuant to the terms of each Note, including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Issuer under each Note,
this Agreement, and the other Transaction Documents, in each case, 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.

 

“Permitted Indebtedness”
means (i) Indebtedness to the Purchasers under the Transaction Documents, (ii) the Seller Notes, (iii) the Indebtedness listed on Schedule
5(d), (iv) promissory notes issued to sellers of businesses that are acquired by the Issuer or any Subsidiary of the Issuer after
the date hereof, and (v) New Subsidiary Debt.

 

“Permitted Issuances”
means the issuance of (a) Common Shares or options to employees, officers or directors of the Issuer or consultants to the Issuer pursuant
to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose for services rendered to the Issuer, provided, however,
such issuance shall not exceed fifteen percent (15%) of the Common Shares issued and outstanding as of the date hereof, (b) securities
upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into Common Shares issued
and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other
than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the disinterested directors of the Issuer or securities issued in financing transactions,
the primary purpose of which is to finance acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Issuer, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration
rights that require or permit the filing of any registration statement in connection therewith, and provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company and shall
provide to the Issuer additional benefits in addition to the investment of funds, but shall not include a transaction in which the Issuer
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities,
(d) Common Shares, options or convertible securities issued to in connection with the provision of goods pursuant to transactions approved
by a majority of the disinterested directors of the Issuer, and (e) Common Shares, options or convertible securities issued in connection
with sponsored research, collaboration, technology license, development, marketing or other similar agreements or strategic partnerships
approved a majority of the disinterested directors of the Issuer.

 

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“Person”
means and includes an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability
company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

“Preferred Shares”
means preferred shares of the Issuer.

 

“Pro Rata Obligations”
means, with respect to a Purchaser, as of any date of determination, the percentage obtained by dividing (i) the outstanding principal
amount owed on the Note(s) held by such Purchaser by (ii) the outstanding principal amount owed on the Notes held by all Purchasers.

 

“Required Purchasers”
means, at any time, Purchasers whose aggregate Pro Rata Obligations exceed 50%; provided, that at any time that Silac is a Purchaser,
Required Purchasers shall include Silac.

 

“Security Agreement”
means that certain Security Agreement, dated of even date herewith, by and among the Issuer, the Guarantors and the Agent, for the benefit
of the Agent and the Purchasers, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

 

“Securities”
means the Notes and the Conversion Shares.

 

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

 

“Seller Notes”
means, collectively, (i) that certain 6 % Amortizing Promissory Note by 1847 Asien Inc. to Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen,
as Trustees of the Wilhelmsen Family Trust, U/D/T dated May 1, 1992; (ii) that certain Vesting Promissory Note by 1847 Cabinet Inc. to
Stephen Mallatt, Jr. and Rita Mallatt; (iii) that certain 6% Subordinated Convertible Promissory Note by 1847 Cabinet Inc. to Steven J.
Parkey; and (iv) that certain 6% Subordinated Convertible Promissory Note by 1847 Cabinet Inc. to Jose D. Garcia.

 

“Seller Note Subordination
Agreements” means, collectively, those certain seller note subordination agreements, dated as of even date herewith, among each
applicable Obligor, Agent, and each holder of a Seller Note.

 

“Silac”
means Silac Insurance Company.

 

“Subordinated Debt”
means, collectively, the debt owed by Obligors under the Seller Notes and any other debt incurred by any Obligor that is contractually
subordinated to the debt owing by the Obligors to Purchasers on terms acceptable to Purchasers in their sole discretion (and identified
as being such by the Issuer and Purchasers) and shall include the obligations of the Obligors arising under the Seller Notes.

 

“Subordination Agreement”
means, collectively, (i) the Seller Note Subordination Agreements, (ii) the Management Fee Subordination Agreements, and (iii) any other
subordination agreement in form and substance acceptable to the Agent and the Required Purchasers in their sole discretion entered into
by and among the Agent, one or more Obligors, and the holder of any Subordinated Debt.

 

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“Subsidiary”
means, as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors
or other managers of such corporation, partnership, limited liability company or other entity is at the time, directly or indirectly,
owned by such Person (irrespective of whether, at the time, capital stock or other ownership interests of any other class or classes of
such corporation or other entity shall have or might have voting power by reason of the happening of any contingency).

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees
or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

 

“Trading Day”
means a day on which the principal Trading Market is open for trading.

 

“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the NYSE American, the
OTCQB, the OTCQX, or the OTC Pink Marketplace (or any successors to any of the foregoing).

 

“Transaction Documents”
means this Agreement, the Notes, the Security Agreement, the Guaranty, the Intellectual Property Security Agreement, the Management Fee
Subordination Agreements, the Seller Note Subordination Agreements, and each related agreement, document and instrument executed in connection
herewith or therewith from time to time.

 

“Transfer Agent”
means VStock Transfer, LLC, and any successor transfer agent of the Issuer.

 

“Transfer Agent Instruction
Letter” means the letter from the Issuer to the Transfer Agent which instructs the Transfer Agent to issue Common Shares upon
conversion of any Note.

 

Capitalized terms not otherwise
defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A or in
the applicable Notes.

 

2. The
Notes.

 

(a) Issuance
of the Notes. At the Closing (as defined below) the Issuer agrees to issue and sell to Purchasers, and, subject to all of the terms
and conditions hereof, Purchasers agree to purchase, the Notes. The sale and purchase of the Notes shall take place at a closing (the
“Closing”) to be held at such place and time as the Issuer and Agent may determine (the “Closing Date”).
At the Closing, the Issuer will deliver the Notes to the Purchasers, and the Purchasers will advance the purchase price as set forth in
the Notes. Each Note will be registered in the applicable Purchaser’s name in the Issuer’s records.

 

(b) Use
of Proceeds. The proceeds of the sale and issuance of the Notes will be used (i) to repay the Existing Debt, (ii) to fund the Closing
Date Redemption, and (iii) to fund a portion of the purchase price of the Closing Date Acquisitions.

 

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(c) Payments.
The Issuer will make all cash payments due under each Note in immediately available funds by 2:00 P.M. (prevailing Eastern Time) on the
date such payment is due in such manner as the Agent or the applicable Purchaser may direct in writing from time to time.

 

(d) Pro
Rata Treatment. Except to the extent otherwise provided herein or in the Notes, (i) each payment or prepayment of principal of the
Notes by the Issuer or any other Obligor shall be made for account of the Purchasers pro rata in accordance with their respective
Pro Rata Obligations; and (ii) each payment of interest on the Notes by the Issuer or any other Obligor shall be made for account of the
Purchasers pro rata in accordance with the their respective share of the interest outstanding on the Notes.

 

(e) Pro
Rata Sharing. If any Purchaser shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of
(x) Obligations due and payable to such Purchaser hereunder and under the other Transaction Documents at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and payable to such Purchaser at such time to (ii) the aggregate
amount of the Obligations due and payable to all Purchasers hereunder and under the other Transaction Documents at such time) of payments
on account of the Obligations due and payable to all Purchasers hereunder and under the other Transaction Documents at such time obtained
by all the Purchasers at such time, or (y) Obligations owing (but not due and payable) to such Purchaser hereunder and under the other
Transaction Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing
(but not due and payable) to such Purchaser at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable)
to all Purchasers hereunder and under the other Transaction Documents at such time) of payments on account of the Obligations owing (but
not due and payable) to all Purchasers hereunder and under the other Transaction Documents at such time obtained by all of the Purchasers
at such time, then, in each case under clauses (x) and (y) above, the Purchaser receiving such greater proportion shall (A) notify the
Agent of such fact, and (B) purchase (for cash at face value) participations in the Notes of the other Purchasers, or make such other
adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Purchasers ratably in accordance with
the aggregate amount of Obligations then due and payable to the Purchasers or owing (but not due and payable) to the Purchasers, as the
case may be; provided, that: (1) if any such participations are purchased and all or any portion of the payment giving rise thereto
is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest;
and (2) the provisions of this Section 2(e) shall not be construed to apply to any payment obtained by a Purchaser as consideration
for the assignment of or sale of a participation in any of its Notes to any assignee or participant. The Obligors consent to the foregoing
and agree, to the extent they may effectively do so under legal requirements, that any Purchaser acquiring a participation pursuant to
the foregoing arrangements may exercise against the Obligors rights of setoff and counterclaim with respect to such participation as fully
as if such Purchaser were a direct creditor of the Obligors in the amount of such participation.

 

3. Representations
and Warranties of the Obligors. The Obligors, jointly and severally, represent and warrant to Agent and each Purchaser, that:

 

(a) Due
Organization, Qualification, etc. Each Obligor is a corporation or limited liability company, duly organized, validly existing and
in good standing under the laws of under the laws of the jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently conducted. Each Obligor (i) has the
power and authority to own, lease and operate its properties and carry on its business as now conducted and to execute, deliver and perform
its obligations under this Agreement and each of the other Transaction Documents to which it is a party; and (ii) is duly qualified,
licensed to do business and in good standing in each jurisdiction in which the failure to be so qualified, licensed or in good standing
could reasonably be expected to have a Material Adverse Effect. Each Obligor has caused to be delivered to Agent correct and complete
copies of its Organizational Documents (as defined below), which documents reflect all amendments made thereto at any time prior to the
Closing Date. No Obligor is in default under or in violation of any provision of its Organizational Documents.

 

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(b) Authority.
The execution, delivery and performance by each Obligor of each Transaction Document to which it is a party, and the consummation of the
transactions contemplated thereby (i) are within the power of such Obligor and (ii) have been duly authorized by all necessary
company action on the part of such Obligor.

 

(c) Enforceability.
Each Transaction Document executed, or to be executed, by each Obligor has been, or will be, duly executed and delivered by such Obligor
and constitutes a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’
rights generally and general principles of equity.

 

(d) Non-Contravention.
The execution and delivery by each Obligor of the Transaction Documents to which it is a party and the performance and consummation of
the transactions contemplated thereby do not and will not: (i) violate such Obligor’s certificate of incorporation or formation,
bylaws or operating agreement (collectively, the “Organizational Documents”), as applicable, or any judgment, order,
writ, decree, statute, rule or regulation applicable to such Obligor; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any mortgage,
indenture, agreement, instrument or contract to which such Obligor is a party or by which it is bound; or (iii) result in the creation
or imposition of any lien upon any property, asset or revenue of such Obligor or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization or approval applicable to such Obligor, its business or operations, or any of
its assets or properties.

 

(e) Approvals.
Except (i) the notice and/or application(s) to the Transfer Agent for the issuance and sale of the Securities and the listing of the Conversion
Shares for trading on each applicable Trading Market in the time and manner required thereby, (ii) the filing of a Form D with the Commission
and such filings as are required to be made under applicable state securities laws and (iii) as set forth in the Organizational Documents,
no consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person
(including, without limitation, the stockholders or other equity holders of any Person) is required in connection with the execution,
delivery and performance of the Transaction Documents executed by each Obligor and the performance and consummation of the transactions
contemplated thereby.

 

(f) Compliance
with Laws. Each Obligor and each of its directors and officers have complied with and are in compliance, in all material respects,
with all laws, statutes, rules, regulations, judgments, or orders which are applicable to it and its business, and within the two (2)
years prior to the Closing Date and any subsequent Closing Date, no claims have been filed against any such Persons alleging any such
violations and no such Person has received any written notice of any such violations.

 

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(g) Capitalization
and Subsidiaries. The authorized, issued and outstanding Equity Interests of each Obligor and their Subsidiaries consist solely of
the Equity Interests described on Schedule 3(g) hereto. All of such issued and outstanding Equity Interests have been duly authorized
and are validly issued, fully paid and nonassessable. Except as set forth in this Agreement (including the Notes), or on Schedule 3(g),
there are no options, warrants, conversion privileges, preemptive rights or other rights presently outstanding to purchase or otherwise
acquire any authorized but unissued Equity Interests or other securities of any Obligor, or any other written agreements of the Issuer
to issue any such securities or rights. Other than any Subsidiaries listed on Schedule 3(g) hereto, no Obligor has any Subsidiaries.

 

(h) Absence
of Undisclosed Liabilities and Obligations. No Obligor has any liability or obligation, either accrued, absolute, direct, or to such
Obligor’s knowledge, contingent or indirect, or otherwise, whether as principal, agent, partner, co-venturer, guarantor or in any
capacity whatsoever other than (i) as set forth on the Latest Balance Sheet (as defined below), and (ii) obligations and liabilities since
the date of the Latest Balance Sheet that are not individually or in the aggregate material.

 

(i) Litigation.
There is no pending or, to the best knowledge of any Obligor, threatened action, suit, proceeding or investigation before any court, governmental
agency or body, or arbitrator having jurisdiction over any Obligor, or any of their Affiliates, that could have a Material Adverse Effect.
Neither the Issuer nor any Guarantor, nor any director or officer thereof, is or has been the subject of any action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. Except as set forth on Schedule
3(i) hereto, there is no pending, or to the best knowledge of any Obligor, basis for a threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction over any Obligor or any of their respective Affiliates.

 

(j) Financial
Statements.

 

(i) The Obligors have
delivered to the Agent copies of: (A) the unaudited balance sheet of the Obligors as of the end of August 2021 (the “Latest Balance
Sheet”) and the related unaudited statement of income for the most recent 12-month period then ended for the Obligors, and (B)
balance sheets and statements of income, cash flows and retained earnings of each Obligor for the two most recent fiscal years for which
the same are available (collectively, the “Financial Statements”).

 

(ii) Each of the Financial
Statements (A) is consistent with such Obligor’s books and records and presents fairly in all material respects the financial
condition and results of operations for such Obligor as of the times and for the periods referred to therein, and (B) has been
prepared in accordance with GAAP, subject to the absence of footnote disclosure.

 

(k) Stop
Transfer. The Securities, when issued, will be restricted securities. The Issuer will not issue any stop transfer order or other order
impeding the sale, resale or delivery of any of the Securities, except as may be required by any applicable federal or state securities
laws and unless contemporaneous notice of such instruction is given to Agent.

 

    - 10 -

    

    

 

(l) No
Integrated Offering. Neither the Issuer nor any of its Affiliates, nor any Person acting on their behalf, has directly or indirectly
made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offer of
the Securities pursuant to this Agreement to be integrated with prior offerings by the Issuer for purposes of the Securities Act or any
applicable stockholder approval provisions. The Issuer will not take any action or steps that would cause the offer or issuance of the
Securities to be integrated with other offerings. The Issuer will not conduct any offering other than the transactions contemplated hereby
that will be integrated with the offer or issuance of the Securities.

 

(m) No
General Solicitation; Private Placement. Neither the Issuer, the Guarantors nor, to the Obligors’ knowledge, any Person acting
on behalf of an Obligor has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Securities. Assuming the accuracy of the Agent’s and Purchasers’
representations and warranties set forth in Section 4(b), no registration under the Securities Act is required for the offer and sale
of the Securities by the Issuer to the Purchasers under the Transaction Documents.

 

(n) Acknowledgement
Regarding Purchasers’ Purchase of the Securities. Each Obligor acknowledges and agrees that each Purchaser is acting solely
in the capacity of an arm’s length purchaser with respect to this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby. Each Obligor further acknowledges that each Purchaser is not acting as a financial advisor or fiduciary
of any Obligor (or in any similar capacity) with respect to the Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby and any advice given by each Purchaser or any of their respective representatives or agents in connection with this
Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to each Purchaser’s
purchase of the Securities. Each Obligor further represents to each Purchaser that each Obligor’s decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent evaluation by such Obligor and its representatives.

 

(o) Investment
Company. No Obligor is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(p) Solvency.
Based on the financial condition of the Issuer as of the Closing Date (and assuming that such Closing shall have occurred), (i) the Issuer’s
saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Issuer’s existing debts
and other liabilities (including known contingent liabilities) as they mature, (ii) the Issuer’s assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business conducted by the Issuer, and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the Issuer, together with the proceeds the Issuer would receive,
were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its debt when such amounts are required to be paid. The Issuer will not incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

 

    - 11 -

    

    

 

(q) Regulatory
Permits. Each Obligor possesses all material certificates, authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct its business, and no Obligor has received any notice of proceedings relating to the
revocation or material modification of any such certificate, authorization or permit.

 

(r) Taxes.
Each Obligor has made and filed through the date hereof (and has valid extensions for applicable period thereafter) all federal and state
income and all other Tax returns, reports, and declarations required by any jurisdiction to which it is subject and (unless and only to
the extent that such Obligor has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)
has paid all Taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for
the payment of all Taxes for periods subsequent to the periods to which such returns, reports or declarations apply. To the knowledge
of each Obligor, there are no unpaid Taxes claimed to be due by the taxing authority of any jurisdiction, and the managers and officers
of each Obligor know of no basis for any such claim.

 

(s) Assets.

 

(i) Each Obligor has
good and marketable title to, or a valid leasehold interest in, the properties and assets used by it or located on its premises that is
material to the business of the Obligors, free and clear of all liens and encumbrances except for (i) such liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Obligor
and (ii) liens for the payment of federal, state or other taxes, as to which appropriate reserves have been made therefor in accordance
with GAAP and the payment of which is neither delinquent nor subject to penalties.. Each Obligor’s leased premises, material equipment
and other material tangible assets are in good operating condition (normal wear and tear excepted) and are fit for use in the ordinary
course of business. No Obligor owns, or has ever owned, any real property, and no Obligor is a party to any agreement or option to purchase
any real property or interest therein.

 

(ii) Schedule
3(s)(ii) attached hereto (as the same may be updated from time to time) sets forth a list of all of the leases, subleases,
licenses, concessions and other agreements (written or oral, and including all amendments, extensions, renewals, guaranties and
other agreements with respect thereto) (collectively, the “Leases”) pursuant to which any Obligor holds a
leasehold or subleasehold estate in, or is granted the right to use or occupy, any land, buildings, improvements, fixtures or other
interest in real property. With respect to each Lease: (A) the Lease is legal, valid, binding, enforceable and in full force and
effect; (B) none of the Obligors is, and to the knowledge of any Obligor, no other party to such Lease is, in breach or default in
any material respect, and to the knowledge of each Obligor, no event has occurred which, with notice or lapse of time or both, would
constitute such a material breach or default or permit termination, modification or acceleration under the Lease; (C) none of the
Obligors or, to the knowledge of any Obligor, any other party, has initiated any disputes or forbearance programs with respect to
the Lease; and (D) no Obligor has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the
Lease.

 

    - 12 -

    

    

 

(t) Contracts.

 

(i) For purposes of
this Section 3(t), “Company Contract” shall mean each of the following contracts, agreements or commitments to which any Obligor
is a party or by which it or its assets or its business is bound or affected, whether written or oral: (A) any bonus, pension, revenue
sharing, profit sharing, retirement plan or deferred compensation plan; (B) any contract relating to employment, confidentiality, non-competition
and/or proprietary rights, and any agreement providing for severance or change of control benefits; (C) any agreement, indenture or other
arrangement relating to Indebtedness or to mortgaging, pledging or otherwise placing a lien or encumbrance on any of its assets; (D) any
contract under which such entity has advanced or loaned any other Person amounts in the aggregate exceeding $50,000; (E) any contract
relating to lending or investing of funds; (F) any license or royalty agreement; (G) any guaranty of any obligation, other than endorsements
made for collection; (H) any material management, consulting, advertising, marketing, promotion, technical services, advisory or other
similar contract or arrangement; (I) any material agreement with any material customer or material supplier; (J) any contract or group
of related contracts with the same party continuing over a period of more than six (6) months from the date or dates thereof, not terminable
by Obligor on thirty (30) days or less notice without penalties, or involving more than $50,000; (K) any contract which prohibits any
Obligor or any of their respective officers or employees from freely engaging in business anywhere in the world; (L) any joint venture
agreement or agreement relating to the acquisition or sale of any company, business, division or other enterprise, whether in the form
of stock purchase, asset acquisition or otherwise; or (M) any agreement, contract or commitment for the purchase or sale of any goods
or services at rates or terms which are materially different from generally available rates or terms, including purchase or sale commitments
entered into in settlement of claims or prior obligations.

 

(ii) All Company
Contracts of the Obligors are listed on Schedule 3(t) hereto.

 

(iii) Each Company
Contract was entered into in the ordinary course of business consistent with past practices, is in full force and effect, is valid and
enforceable in accordance with its terms, and constitutes a legal and binding obligation of the applicable Obligor(s) and to the knowledge
of each Obligor, each other party thereto. No Obligor has given or received, and, to the knowledge of each Obligor, no fact or circumstance
exists which could reasonably be expected to give rise to, with the passage of time or the giving of notice or both, any material breach,
notice of material default, termination or partial termination under any Company Contract, and there is no existing or continuing default
by any Obligor or, to its knowledge, any other party in the performance or payment of any obligation under any such contract, agreement
or commitment, and each Obligor is in compliance in all material respects with the provisions of each such Company Contract. No Obligor
has any knowledge of any anticipated breach or expectation or intention on the part of any party to not fully perform any obligation under
any such Company Contract.

 

(u) Intellectual
Property.

 

(i) Schedule 3(u)
hereto (as the same may be updated from time to time) contains a true, complete and accurate list of all (A) patented or registered
intellectual property owned or used by any Obligor, (B) pending patent applications and applications for registrations of other
intellectual property filed by any Obligor, (C) material unregistered trade names, internet domain names and company names
owned or used by any Obligor, and (D) material unregistered trademarks, service marks, and computer software owned or used by any
Obligor. Schedule 3(u) also contains a true, complete and accurate list of all licenses and other rights granted by any
Obligor to any third party with respect to any intellectual property and all licenses and other rights granted by any third party to
any Obligor with respect to any intellectual property (other than off-the-shelf software packages), in each case identifying the
subject intellectual property.

 

    - 13 -

    

    

 

(ii) No Obligor is
using, or reasonably anticipates it will need to use in the future, any intellectual property that is owned by any Affiliate of
any Obligor, any member of any Obligor or any Affiliate of any member of an Obligor.

 

(iii) No Obligor has any proprietary
or confidential information that is owned or claimed by third parties and that is not rightfully in the possession of an Obligor, and
each Obligor has complied in all material respects with all contracts governing the disclosure and use of proprietary or confidential
information.

 

(iv) No Obligor has
received a notice (written or otherwise) that any right in any intellectual property has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.

 

(v) Affiliate
Transactions. Except as set forth in Schedule 3(v) attached hereto, there is no Indebtedness owed to any Obligor by any Affiliate
of an Obligor, or by any Obligor to any Affiliate. Except as set forth in Schedule 3(v) and except for employment arrangements
made in the ordinary course of business, no member of any Obligor, nor any Affiliate of any member of an Obligor, is a party to any agreement,
contract, commitment, arrangement or transaction with Issuer or the Guarantors or any of their Affiliates which (i) pertains to the business
or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business or (ii)
benefits, directly or indirectly, any such member or its Affiliates.

 

(w) Closing
Date Acquisitions. The Closing Date Acquisition Documents delivered to Agent are true, complete, and correct copies of such agreements,
and the Obligors have delivered to Agent true, complete, and correct copies of all material amendments, supplements, and modifications
thereto. As of the Closing Date, the Closing Date Acquisitions have been consummated in accordance with the terms of the Closing Date
Acquisition Documents.

  

(x) Seller
Notes. The Seller Notes delivered to Agent are true, complete, and correct copies of such Seller Notes.

 

(y) Disclosure.
All information furnished to the Agent, Purchasers or the foregoing’s counsel by or on behalf of the Obligors in connection with
the transactions contemplated hereby or thereby, when taken as a whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements herein or therein not misleading. There is no fact of which any Obligor
is aware that has not been disclosed to the Agent or the Purchasers and that is or could reasonably be expected to have a Material Adverse
Effect.

 

    - 14 -

    

    

 

4. Representations
and Warranties of Purchasers. The Agent and Purchasers, as applicable, represent and warrant to each Obligor upon the acquisition
of each Note as follows:

 

(a) Binding
Obligation. The Agent and each Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to
perform the Agent’s and Purchasers’ obligations hereunder. Each of this Agreement and each other Transaction Document to which
the Agent or each Purchaser is a party is a valid and binding obligation of the Agent or Purchaser, as applicable, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement
of creditors’ rights generally and general principles of equity.

 

(b) Securities
Law Compliance. The Purchasers have been advised that the Securities have not been registered under the Securities Act, or any state
securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws
or unless an exemption from such registration requirements is available. The Purchasers are aware that the Issuer is under no obligation
to effect any such registration with respect to the Securities. The Purchasers are purchasing the Securities for the Purchasers’
own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof
(this representation and warranty not limiting such Purchasers’ right to sell the Securities in compliance with applicable federal
and state securities laws). The Purchasers have such knowledge and experience in financial and business matters that the Purchasers are
capable of evaluating the merits and risks of such investment, are able to incur a complete loss of such investment and are able to bear
the economic risk of such investment for an indefinite period of time. Each Purchaser is an “accredited investor” as such
term is defined in Rule 501(a) of Regulation D under the Securities Act.

 

5. Covenants
of the Obligors. Each Obligor, jointly and severally, hereby covenants that from and after the date of this Agreement and so long
as any of the Obligations are outstanding:

 

(a) Use
of Proceeds. The Issuer will use the proceeds of the sale of the Notes solely (i) to repay the Existing Debt, (ii) to fund the Closing
Date Redemption, and (iii) to pay a portion of the purchase price for the Closing Date Acquisitions. No portion of the proceeds of the
sale of the Notes shall be used by the Issuer to purchase or carry “margin stock”, as such term is defined in Regulation U
of the Board of Governors of the Federal Reserve, or otherwise in violation of such Regulation U or other applicable law. The Obligors
will supply to the Agent such additional information and documents that the Agent may reasonably request with respect to the use of proceeds
and will permit the Agent to have access to any and all records and information and personnel as the Agent deems necessary to verify such
use of proceeds.

 

(b) Transfers;
Sale of Assets, Etc. No Obligor will, nor will it permit any Subsidiary to, without the Agent’s written consent, sell, lease
or otherwise dispose of any significant portion of its assets outside the ordinary course of business, or wind up, liquidate or dissolve
(including any declaration of bankruptcy) or sell or transfer any assets outside of the ordinary course of business to (i) any Person
who is not an Obligor or (ii) is party to any New Subsidiary Debt.

 

(c) Organizational
Documents. No Obligor will amend, modify or restate, or permit the amendment, modification or restatement of, its Organizational Documents.

  

(d) Indebtedness.
No Obligor will, nor will it permit any of its Subsidiaries to, create, incur, assume, or suffer to exist any Indebtedness, except Permitted
Indebtedness.

 

(e) Liens.
No Obligor shall, without the prior written consent of Agent, incur, create, assume or suffer to exist any Lien on any of its property
of assets whether now owned or hereinafter acquired except for (i) Liens in connection with the Transaction Documents, (ii) Liens for
Taxes not yet due or which are being contested in good faith by appropriate proceedings; (iii) non-consensual Liens arising by operation
of law, arising in the ordinary course of business, and for amounts which are not overdue for a period of more than 30 days or that are
being contested in good faith by appropriate proceedings; (iv) Liens on property securing indebtedness incurred by the Obligors to provide
funds for all or a portion of the cost of acquiring, constructing, altering, expanding, improving or repairing such property; (v) Liens
securing purchase money Indebtedness incurred in connection with the acquisition of capital assets by the Obligors in the ordinary course
of business, including, without limitation, those Liens listed on Schedule 5(e) (“Purchase Money Liens”), and
(vi) Liens on property of Obligors incurred using the proceeds of New Subsidiary Debt securing such New Subsidiary Debt.

 

    - 15 -

    

    

 

(f) Investments;
New Subsidiaries. In the event any Obligor forms or acquires any other Subsidiary after the date hereof, such Obligor shall promptly
upon such formation or acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty Agreement, Security Agreement
and such Transaction Documents as the Agent may then require, and the Obligors shall also deliver to the Agent, or cause such Subsidiary
to deliver to the Agent, at the Obligors’ cost and expense, such other instruments, documents, certificates, and opinions reasonably
required by the Agent in connection therewith; provided, however, that with respect to any Obligors acquired using the proceeds
of New Subsidiary Debt, the Agent’s Lien will be a second priority Lien and the Agent’s Lien and other rights in such Collateral
will be subordinate to the Lien and rights of the lender providing the New Subsidiary Debt.

 

(g) Affiliate
Transactions. No Obligor will, nor will it permit any of its Subsidiaries to lend money, give credit, make advances to or enter into
any transaction with any officers, directors, employees, Subsidiaries and Affiliates of any Obligor, except (i) transactions between or
among Obligors, including, without limitation, intercompany indebtedness, (ii) the Management Agreements, and (iii) transactions in the
ordinary course of business on terms no less favorable to the applicable Obligor than those that could be obtained in an arm’s length
transaction with an unrelated third party.

 

(h) Restricted
Payments. No Obligor will, nor will it permit its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly,
any dividend or distribution (including a distribution of cash or other property) on any class of its membership units or other equity
interests, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption,
retirement, defeasance or other acquisition of, any class of its membership units or other equity interests or Indebtedness subordinated
to the Obligations or any guarantee thereof or any options, warrants, or other rights to purchase such membership units or other equity
interests or such Indebtedness (specifically including any payment or reimbursement obligation in connection with any purchase or buy-in
right with respect thereto), whether now or hereafter outstanding (each, a “Restricted Payment”); provided, that the
Issuer may (i) make the Closing Date Redemption and (ii) other Restricted Payments so long as (A) the Issuer shall have funded the Minimum
Interest Reserve in unrestricted cash to the Interest Reserve Account and (B) the Obligors are in pro forma compliance with Section 5(l)(ii)
hereof measured as of the most recent month end after giving effect to the Restricted Payment.

 

(i) Interest
Reserve Account. Issuer shall establish and maintain the Interest Reserve Account and shall not make payments out of such Interest
Reserve Account, other than payments of Interest under the Notes.

 

    - 16 -

    

    

 

(j) Notice
of Events of Default. Each Obligor shall immediately provide written notice to the Agent of the occurrence of any Event of Default,
or any event or condition which, with the passage of time or giving of notice or both, would constitute an Event of Default.

 

(k) Reporting.
The Obligors shall cause to be prepared and delivered the following to the Agent:

 

(i) As
soon as available, but in any event within one hundred eighty (180) days after the end of Issuer’s fiscal year, audited financial
statements of each Obligor prepared in accordance with GAAP, together with an unqualified opinion on such financial statements of a nationally
recognized or other independent public accounting firm reasonably acceptable to Agent.

 

(ii) As
soon as available and in any event no later than thirty (30) days after the end of each fiscal quarter of the Obligors, unaudited financial
statements for each Obligor (which shall be prepared in accordance with GAAP), including a balance sheet and statements of income and
cash flows showing the cash distributed in such fiscal quarter.

 

In addition, each Obligor shall,
promptly following the Agent’s request, provide the Agent with such records, reports and other information that the Agent may reasonably
request from time to time.

 

It is acknowledged and agreed
that: (i) the filing of Issuer’s Form 10-K with the Securities and Exchange Commission within the time required under the rules
and regulations of the Securities and Exchange Commission after the end of each fiscal year of Issuer; and (ii) the filing of Issuer’s
Form 10-Q with the Securities and Exchange Commission within the time required under the rules and regulations of the Securities and Exchange
Commission after the end of each of the first three fiscal quarters of Issuer, shall be deemed to satisfy the requirements of clauses
(i) and (ii) above.

 

(l) Insurance.
Each Obligor shall keep its business and the Collateral insured for risks and in amounts standard for companies in such Obligor’s
industry and location, and as Agent may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that
are reasonably satisfactory to Agent. All property policies shall have a lender’s loss payable endorsement showing Agent, in its
capacity as agent of the Purchasers, as an additional loss payee and all liability policies shall show Agent, in its capacity as agent
of the Purchasers, as an additional insured and all policies shall provide that the insurer must give Agent at least thirty (30) days’
notice (or ten (10) days in the case of non-payment of premiums) before canceling its policy. At Agent’s request, each Obligor shall
deliver certified copies of policies and evidence of all premium payments. If any Obligor fails to obtain insurance as required hereunder
or to pay any amount or furnish any required proof of payment to third persons, Agent may make all or part of such payment or obtain such
insurance policies required hereunder, and take any action under the policies which the Agent reasonably deems prudent. On or prior to
the Closing Date and prior to each policy renewal, each Obligor shall furnish to Agent certificates of insurance or other evidence satisfactory
to Agent that insurance complying with all of the above requirements is in effect.

 

(m) Certain
Financial Covenants.

 

(i) Maximum
Debt to EBITDA. Issuer and its Subsidiaries shall not permit the Leverage Ratio for any twelve fiscal month period set forth in the
table below to be less than the ratio set forth opposite thereto

 

	Calendar Quarter Ending	Maximum Leverage Ratio
	December 31, 2021	5.00:1.00
	March 31, 2022 through December 31, 2022	4.75:1.00
	March 31, 2023 and thereafter	4.50:1.00

 

    - 17 -

    

    

 

(ii) Fixed
Charge Coverage Ratio. Issuer and its Subsidiaries shall not permit the Fixed Charge Coverage Ratio for any twelve fiscal month period
set forth in the table below to be less than the ratio set forth opposite thereto.

 

	Calendar Quarter Ending	Minimum Fixed Charge Coverage Ratio
	December 31, 2021	1.50:1.00
	March 31, 2022 through December 31, 2022	1.55:1.00
	March 31, 2023 and thereafter	1.60:1.00

 

(n) Tax
Returns. Obligors shall timely file all Tax returns (or any extensions related thereto) and timely pay all foreign, federal, state
and local Taxes owed by such Obligors, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans of each Obligor in accordance with their terms if the failure to fund any such plans could reasonably be expected to result in a
Material Adverse Effect.

 

(o) Post-Closing
Covenants. Not later than 30 days after the Closing Date (or such later date as Agent shall agree to in writing), the Obligors shall
have delivered to the Agent:

 

(i) endorsements
satisfactory to the Agent with respect to each Obligor’s liability insurance and property insurance policies, which shall name Agent
as lender’s loss payable and additional insured, as applicable, and provide for notice of cancellation and/or additional insured
clauses or endorsements in favor of Agent as Agent shall request;

 

(ii) landlord
consents and waivers on such real property leased by the Obligors as Agent shall request, in each case in form and substance reasonably
satisfactory to the Agent;

 

(iii) account
control agreements with respect to each Obligor’s operating and investment accounts as Agent shall request, in form and substance
reasonably satisfactory to the Agent;

 

(iv) original
stock certificates and promissory notes, together with duly executed transfer powers, with respect to all stock and other Equity Interest
certificates and promissory notes included in the Collateral; and

 

(v) evidence
that Obligors have caused each of (x) UCC No. U200028512523, filed by Wells Fargo Commercial Distribution Finance, LLC against Asien’s
Appliance, Inc. with the State of California, and (y) UCC No. U210085409433, filed by Brandsource Financial, LLC against Asien’s
Appliance, Inc. with the State of California, to either be terminated or amended to limit the collateral described therein to inventory
financed through the applicable floor plan program, proceeds thereof, and related assets.

 

    - 18 -

    

    

 

6. Other
Agreements of the Parties.

 

(a) Transfer
Restrictions.

 

(i) The
Purchasers agree that the Securities may only be disposed of in compliance with state and federal securities laws. In connection with
any transfer of Securities other than pursuant to, and in compliance with the requirements of, the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities laws, to each
Purchaser or to an Affiliate of such Purchaser or in connection with a pledge as contemplated in Section 6(a)(ii), the Company may require
the transferor thereof to provide to the Issuer an opinion of counsel selected by the transferor and reasonably acceptable to the Issuer,
the form and substance of which opinion shall be reasonably satisfactory to the Issuer, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.

 

(ii) The
Purchasers agree to the imprinting, so long as is required by this Section 6(a)(ii), of a legend on any of the Securities in the following
form or a substantially similar form as may be required:

 

[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE] [NOR THE SECURITIES FOR WHICH THIS SECURITY MAY BE EXERCISED] HAS [NOT] BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
[AND THE SECURITIES ISSUABLE UPON [CONVERSION/EXERCISE] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Issuer acknowledges and
agrees that each Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant
a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined
in Rule 501(a) of Regulation D under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required
under the terms of such arrangement, each Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the Issuer and no legal opinion of legal counsel of the pledgee, secured party
or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At each Purchaser’s expense,
as applicable, the Issuer will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities, including, if the Securities are registered under a registration statement,
the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision
of the Securities Act to appropriately amend the list of selling stockholders thereunder.

 

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(iii) Certificates
evidencing the Securities shall not contain any legend (including the legend set forth in Section 6(a)(ii) hereof): (i) while a registration
statement covering the resale of such Securities is effective under the Securities Act, (ii) following any sale of such Securities pursuant
to Rule 144, (iii) if such Securities are eligible for sale under Rule 144, without the requirement for the Issuer to be in compliance
with the current public information required under Rule 144 as to such Securities and without volume or manner-of-sale restrictions, or
(iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Issuer shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after
the events described in clauses (i)-(iv) in the immediately preceding sentence if required by the Transfer Agent to effect the removal
of the legend hereunder. The Issuer agrees that following such time as such legend is no longer required under this Section 6(a)(iii),
it will, no later than two days following the delivery by a Purchaser to the Issuer or the Transfer Agent of a certificate representing
Securities issued with a restrictive legend (such second Trading Day, the “Legend Removal Date”), deliver or cause
to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends. The
Issuer may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 6.

 

(iv) If
by the Legend Removal Date, the Issuer shall fail to cause to be issued and delivered to a Purchaser a certificate representing such Securities
that is free from all restrictive and other legends, and if on or after such Legend Removal Date such Purchaser purchases (in an open
market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by such Purchaser of Common Shares that such Purchaser
anticipated receiving from the Issuer without any restrictive legend (the “Covering Shares”), then the Issuer shall, (1) within
two Trading Days after such Purchaser’s request, pay cash to such Purchaser in an amount equal to the excess (if any) of such Purchaser’s
total purchase price (including brokerage commissions, if any) for the Covering Shares, over the product of (A) the number of Covering
Shares, times (B) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including brokerage
commissions, if any) and (2) deliver to such Purchaser the Securities that would have been issued had the Issuer timely complied with
its delivery obligations hereunder.

  

(b) Acknowledgment
of Dilution. The Issuer acknowledges that the issuance of the Securities may result in dilution of the outstanding Common Shares,
which dilution may be substantial under certain market conditions. The Issuer further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Conversion Shares pursuant to the Transaction Documents, are unconditional
and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Issuer may have against a Purchaser and regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Issuer.

 

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(c) Furnishing
of Information; Public Information. Until the date that the Purchasers own no Securities, the Issuer agrees to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) after the date hereof all reports required to be filed by the
Issuer on the date hereof pursuant to the Securities Act even if the Issuer is not then subject to the reporting requirements of the Securities
Act.

 

(d) Integration.
The Issuer shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any trading market such that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

(e) Conversion
and Exercise Procedures. The form of Notice of Conversion included in each Note sets forth the totality of the procedures required
of a Purchaser in order to convert such Note. Without limiting the preceding sentence, no ink-original Notice of Conversion shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required in order to
convert any Note. No additional legal opinion, other information or instructions shall be required of a Purchaser to convert any Note.
The Issuer shall honor conversions of the Notes and shall deliver Conversion Shares in accordance with the terms, conditions and time
periods set forth in the Transaction Documents.

 

(f) Securities
Laws Disclosure; Publicity. The Issuer shall (a) at or before 9:00 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report
on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act.
Thereafter, the Issuer shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions
contemplated hereby and provide copies thereof to the Agent promptly after filing. From and after the issuance of such press release,
the Issuer represents to the Agent that it shall have publicly disclosed all material, non-public information delivered to the Agent by
the Issuer or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Issuer and Agent shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Issuer, Agent nor Purchasers shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Issuer, with respect to any press release of Agent or Purchasers, or without
the prior consent of Agent, with respect to any press release of the Issuer, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice
of such public statement or communication. Notwithstanding the foregoing, the Issuer shall not publicly disclose the name of Agent or
Purchasers, or include the name of Agent or Purchasers in any filing with the Commission or any regulatory agency or trading market, without
the prior written consent of Agent or each Purchaser, as applicable, except: (a) as required by federal securities law in connection with
the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or trading market
regulations, in which case the Issuer shall provide the Agent or each Purchaser, as applicable, with prior notice of such disclosure required
under this clause (b). Neither the Issuer nor any Subsidiary shall, nor shall any of their respective officers, directors, employees and
agents, provide the Agent or Purchasers with any material nonpublic information regarding the Issuer or any Subsidiary from and after
the issuance of the above referenced press release without the express written consent of the Agent or Purchasers, as applicable.

 

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(g) Additional
Secured Debt Facilities. The Issuer agrees that, as long as any Note is outstanding, the terms of any additional secured indebtedness
entered into by any Obligor with any third party, shall be not materially more favorable (taken as a whole) to the lenders providing such
Indebtedness than such terms in this Agreement (except for any materially more favorable terms that are added for the benefit of the Purchasers
under this Agreement).

 

7. Conditions
to the Effectiveness of this Agreement and Closing. This Agreement, and the Purchasers’ obligations at the Closing are subject
to the fulfillment of all of the following conditions, any of which may be waived in whole or in part by the Agent in its sole discretion:

 

(a) Representations
and Warranties. The representations and warranties made by the Obligors in Section 3 hereof shall be true and correct
on the Closing Date.

 

(b) Certain
Transaction Documents. The Agent shall have received executed copies of this Agreement, the Notes, and the other Transaction Documents,
including without limitation the following:

 

(i) the
Guaranty Agreement;

 

(ii) the
Security Agreement;

 

(iii) each
Subordination Agreement; and

 

(iv) such
other documents, instruments, and agreements as the Agent or Purchasers may reasonably request.

 

(c) Collateral
Matters. The Agent shall have received (1) such UCC financing statements and other applicable documents under the laws of all necessary
or appropriate jurisdictions with respect to the perfection of the Liens granted under the Transaction Documents, together with (2) copies
of favorable UCC, Tax, judgment and fixture lien search reports in all necessary or appropriate jurisdictions and under all legal and
trade names of the Obligors, as requested by Agent, indicating that there are no Liens on any of the Collateral other than Permitted Liens
or Liens which, in connection with the funding hereunder, will be terminated or released, as applicable, (3) the Information Certificate,
duly completed and executed by the Obligors, and (4) an intellectual property security agreement with respect to all intellectual property
assets of the Obligors registered with the U.S. Patent and Trademark Office or U.S. Copyright office.

 

(d) Secretary’s
Certificates. The Agent shall have received a certificate of the Secretary, Assistant Secretary or other officer of each Obligor,
attaching and certifying copies of its Organizational Documents, certificates of good standing or existence, as may be available from
the Secretary of State of the jurisdiction of organization of such Obligor and each other jurisdiction specified therein, and of the resolutions
of its board of directors, managers, members and/or other equivalent governing body, as applicable, or comparable organizational documents
and authorizations, authorizing the execution, delivery and performance of the Transaction Documents to which it is a party and certifying
the name, title and true signature of each officer of such Obligor executing the Transaction Documents to which it is a party.

 

(e) Payoff
Letters. The Agent shall have received such payoff letters, UCC termination statements, intellectual property releases, and such other
collateral release documents as may be necessary to evidence the release of any Liens in favor of the holders of the Existing Debt on
any property of any Obligor.

 

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(f) Opinion.
The Agent shall have received an opinion letter, in form and substance acceptable to Agent, from counsel to the Issuer to the effect that
(i) the Issuer’s offer, sale and issuance of the Securities, in the manner contemplated by this Agreement, is exempt from the registration
requirements of the Securities Act and (ii) as to the due authorization and enforceability of this Agreement and the other Transaction
Documents.

 

(g) Insurance.
Certificates of insurance and endorsements naming Agent, in its capacity as agent to the Purchasers, as loss payee and additional insured
on each Obligor’s property and liability policies as may be requested by Agent.

 

(h) Governmental
Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state
securities commissions, the Obligors shall have obtained all governmental approvals required in connection with the Securities.

 

(i) Legal
Requirements. At the Closing, the sale and issuance by the Issuer, and the purchase by the Purchasers, of the Securities shall be
legally permitted by all laws and regulations to which the Purchasers or any of the Obligors are subject.

 

(j) Proceedings
and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents
and instruments incident to such transactions shall be reasonably satisfactory in form and substance to the Agent and Purchasers.

 

(k) Closing
Date Acquisitions. The Agent shall be satisfied with the terms of the Closing Date Acquisitions and that the Closing Date Acquisitions
shall be consummated on the Closing Date, concurrent with the funding hereunder.

 

(l) Purchasers’
Expenses. Payment of the expenses to the Agent, for the benefit of the Purchasers, in connection with the Transaction Documents, subject
to a cap of $200,000, for the expenses incurred prior to the Closing Date.

 

(m) Additional
Conditions. The Agent shall have received lien searches, evidence of perfection of its security interest, evidence of the Obligors’
respective existence and authorization of the transactions contemplated hereby, and such other agreements, documents and instruments as
it may reasonably require.

 

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8. Conditions
to Obligations of the Issuer. The Issuer’s obligation to issue and sell the Notes at Closing is subject to the fulfillment,
on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Issuer:

 

(a) Representations
and Warranties. The representations and warranties made by the Agent and Purchasers, as applicable, in Section 4 hereof
shall be true and correct.

 

(b) Governmental
Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state
securities commissions, the Issuer shall have obtained all governmental approvals required in connection with the lawful sale and issuance
of the Securities.

 

(c) Legal
Requirements. At each Closing, the sale and issuance by the Issuer, and the purchase by the Purchasers, of the Securities, shall be
legally permitted by all laws and regulations to which the Purchasers or the Issuer are subject.

 

(d) Purchase
Price. The Purchasers shall have delivered to Issuer the Purchase Price in respect of the Notes being purchased.

  

(e) Transaction
Documents. The Issuer shall have received executed copies of this Agreement and the other Transaction Documents.

 

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9. Agent

 

(a) Each
Purchaser hereby designates and appoints Leonite Capital as its agent under this Agreement and the other Transaction Documents and each
Purchaser hereby irrevocably authorizes the Agent to execute and deliver each of the other Transaction Documents on its behalf and to
take such other action on its behalf under the provisions of this Agreement and each other Transaction Document and to exercise such powers
and perform such duties as are expressly delegated to the Agent by the terms of this Agreement or any other Transaction Document, together
with such powers as are reasonably incidental thereto. The Agent agrees to act as agent for and on behalf of the Purchasers on the conditions
contained in this Section 9. Any provision to the contrary contained elsewhere in this Agreement or in any other Transaction Document
notwithstanding, the Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Transaction
Documents, nor shall the Agent have or be deemed to have any fiduciary relationship with any Purchaser, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Transaction Document or otherwise
exist against the Agent. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or
the other Transaction Documents with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to
create or reflect only a representative relationship between independent contracting parties. Each Purchaser hereby further authorizes
the Agent to act as the secured party under each of the Transaction Documents that create a Lien on any item of Collateral. Except as
expressly otherwise provided in this Agreement, the Agent shall have and may use its sole discretion with respect to exercising or refraining
from exercising any discretionary rights or taking or refraining from taking any actions that the Agent expressly is entitled to take
or assert under or pursuant to this Agreement and the other Transaction Documents. Without limiting the generality of the foregoing, or
of any other provision of the Transaction Documents that provides rights or powers to the Agent, Purchasers agree that the Agent shall
have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the collections of the Obligors and
their Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Transaction Documents,
(c) exclusively receive, apply, and distribute the collections of the Obligors and their Subsidiaries as provided in the Transaction Documents,
(d) open and maintain such bank accounts and cash management arrangements as the Agent deems necessary and appropriate in accordance with
the Transaction Documents for the foregoing purposes with respect to the Collateral and the collections of the Obligors and their Subsidiaries,
(e) perform, exercise, and enforce any and all other rights and remedies of the Purchasers with respect to the Obligors, Guarantors, the
Obligations, the Collateral, the collections of the Obligors and their Subsidiaries, or otherwise related to any of same as provided in
the Transaction Documents, and (f) incur and pay such expenses and other amounts as the Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Transaction Documents.

 

(b) The
Agent may execute any of its duties under this Agreement or any other Transaction Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence
or willful misconduct.

 

(c) None
of the Agent-Related Persons shall (a) be liable to the Purchasers for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction), or (b) be responsible
in any manner to any of the Purchasers for any recital, statement, representation or warranty made by any Obligor, any Subsidiary or Affiliate
thereof, any other Person party to a Transaction Document, or any officer or director thereof, contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or any other Transaction Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Transaction Document, or for any failure of any Obligor or Subsidiary thereof or any other
party to any Transaction Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Purchasers to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the books and records or properties of the Obligors and their respective
Subsidiaries.

 

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(d) The
Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Obligor or counsel to any Purchaser), independent accountants
and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement
or any other Transaction Document unless the Agent shall first receive such advice or concurrence of the Purchasers as it deems appropriate
and until such instructions are received, the Agent shall act, or refrain from acting, as it deems advisable. If the Agent so requests,
it shall first be indemnified to its reasonable satisfaction by the Purchasers against any and all liability and expense that may be incurred
by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Transaction Document in accordance with a request or consent of the Required Purchasers
and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Purchasers.

 

(e) The
Agent shall not be deemed to have knowledge or notice of the occurrence of any default or Event of Default, unless the Agent shall have
received written notice from a Purchaser or an Obligor referring to this Agreement, describing such default or Event of Default, and stating
that such notice is a “notice of default” (in which case the Agent shall promptly give notice of such receipt to all Purchasers).
Subject to Section 9(d), the Agent shall take such action with respect to such default or Event of Default as may be requested
by the Required Purchasers in accordance with Section 10(m); provided, however,
that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such default or Event of Default as it shall deem advisable.

 

(f) Each
Purchaser acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent
hereinafter taken, including any review of the affairs of any Obligor or any Subsidiary or Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Purchaser. Each Purchaser represents to the Agent that it has, independently
and without reliance upon any Agent-Related Person and based on such due diligence, documents and information as it has deemed appropriate,
made its own appraisal of, and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness
of the Obligors or any other Person party to a Transaction Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Obligors. Each Purchaser also
represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Transaction Documents, and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition and creditworthiness of the Obligors or any other Person
party to a Transaction Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Purchasers
by the Agent, the Agent shall not have any duty or responsibility to provide any Purchaser with any credit or other information concerning
the business, prospects, operations, property, financial and other condition or creditworthiness of the Obligors or any other Person party
to a Transaction Document that may come into the possession of any of the Agent-Related Persons. Each Purchaser acknowledges that the
Agent does not have any duty or responsibility, either initially or on a continuing basis (except to the extent, if any, that is expressly
specified herein) to provide such Purchaser with any credit or other information with respect to any Obligor, their respective Affiliates
or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came in to the Agent’s
or its Affiliates’ or representatives’ possession before or after the date on which such Purchaser became a party to this
Agreement.

 

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(g) The
Agent may incur and pay expenses and other amounts to the extent the Agent reasonably deems necessary or appropriate for the performance
and fulfillment of its functions, powers, and obligations pursuant to the Transaction Documents, including court costs, attorneys’
fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection
agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or
not the Obligors or other Obligor is obligated to reimburse the Agent or Purchasers for such expenses pursuant to this Agreement or otherwise.
The Agent is authorized and directed to deduct and retain sufficient amounts from the collections of the Obligors and its Subsidiaries
received by the Agent to reimburse the Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Purchasers.
In the event the Agent is not reimbursed for such costs and expenses by the Obligors, each Purchaser hereby agrees that it is and shall
be obligated to pay to the Agent such Purchaser’s ratable share thereof. Whether or not the transactions contemplated hereby are
consummated, each of the Purchasers, on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the extent not reimbursed
by or on behalf of the Obligors and without limiting the obligation of Obligors to do so), from and against any and all claims and liabilities.
Without limitation of the foregoing, each Purchaser shall reimburse the Agent upon demand for such Purchaser’s ratable share of
any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by the Agent
in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Transaction
Document, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Obligors. The undertaking in this Section
9(g) shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent.

 

(h) Leonite
Capital and its Affiliates may make loans to, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Obligors and their Subsidiaries and Affiliates and any other Person party to any Transaction
Document as though Leonite Capital were not the Agent hereunder, and, in each case, without notice to or consent of the other members
of the Purchasers. The other Purchasers acknowledge that, pursuant to such activities, Leonite Capital or its Affiliates may receive information
regarding Obligors or their Affiliates or any other Person party to any Transaction Documents that is subject to confidentiality obligations
in favor of Obligors or such other Person and that prohibit the disclosure of such information to the Purchasers, and the Purchasers acknowledge
that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver the Agent will use its reasonable
best efforts to obtain), the Agent shall not be under any obligation to provide such information to them. The terms “Purchaser”
and “Purchasers” include Leonite Capital in its individual capacity.

 

(i) The
Agent may resign as the Agent upon 30 days prior written notice to the Purchasers (unless such notice is waived by the Required Purchasers)
and Obligors (unless such notice is waived by Obligors). If the Agent resigns under this Agreement, the Required Purchasers shall be entitled
(without the consent of Obligors or any other Person) to appoint a successor Agent for the Purchasers. If no successor Agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Purchasers, a successor
Agent. Upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers,
and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment,
powers, and duties as the Agent shall be terminated. After any retiring Agent’s resignation hereunder as the Agent, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under
this Agreement. If no successor Agent has accepted appointment as the Agent by the date which is 30 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Purchasers shall perform
all of the duties of the Agent hereunder until such time, if any, as the Purchasers appoint a successor Agent as provided for above.

 

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(j) Any
Purchaser and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Equity
Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Obligors and
their Subsidiaries and Affiliates and any other Person party to any Transaction Documents as though such Purchaser were not a Purchaser
hereunder without notice to or consent of the other Purchasers. The other members of the Purchasers acknowledge that, pursuant to such
activities, such Purchaser and its respective Affiliates may receive information regarding Obligors or their Affiliates or any other Person
party to any Transaction Documents that is subject to confidentiality obligations in favor of Obligors or such other Person and that prohibit
the disclosure of such information to the Purchasers, and the Purchasers acknowledge that, in such circumstances (and in the absence of
a waiver of such confidentiality obligations, which waiver such Purchaser will use its reasonable best efforts to obtain), such Purchaser
shall not be under any obligation to provide such information to them.

 

(k) The
Purchasers hereby irrevocably authorize the Agent to release any Lien on any Collateral (i) upon the payment and satisfaction in full
by the Obligors of all of the Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable
in connection therewith and if the Obligors certify to the Agent that the sale or disposition is permitted under the Transaction Documents
(and the Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Obligor
owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to
a Obligor under a lease that has expired or is terminated in a transaction permitted under this Agreement. The Obligors and the Purchasers
hereby irrevocably authorize the Agent, based upon the instruction of the Required Purchasers, to credit bid and purchase (either directly
or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted by the Agent under the
provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, at any sale thereof conducted under the provisions of
the Bankruptcy Code, including Section 363 of the Bankruptcy Code, or at any sale or foreclosure conducted by Agent (whether judicial
action or otherwise) in accordance with legal requirements. Except as provided above, the Agent will not execute and deliver a release
of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral,
all of the Purchasers, or (z) otherwise, the Required Purchasers. Upon request by the Agent or Obligors at any time, the Purchasers will
confirm in writing the Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section
9(k); provided, however, that (1) the Agent shall not be required to execute any document necessary to evidence such
release on terms that, in the Agent’s opinion, would expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge,
affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of any Obligor in respect
of) all interests retained by such Obligor, including, the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.

 

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(l) The
Agent shall have no obligation whatsoever to any of the Purchasers to assure that the Collateral exists or is owned by any Obligor or
Subsidiary thereof or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or that any particular
items of Collateral meet the eligibility criteria applicable in respect thereof or whether to impose, maintain, reduce, or eliminate any
particular reserve hereunder or whether the amount of any such reserve is appropriate or not, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted
or available to the Agent pursuant to any of the Transaction Documents, it being understood and agreed that in respect of the Collateral,
or any act, omission, or event related thereto, subject to the terms and conditions contained herein, the Agent may act in any manner
it may deem appropriate, in the Agent’s sole discretion given the Agent’s own interest in the Collateral in its capacity as
one of the Purchasers and that the Agent shall have no other duty or liability whatsoever to any Purchaser as to any of the foregoing,
except as otherwise provided herein.

 

(m) Each
of the Purchasers agrees that it shall not, unless specifically requested to do so in writing by the Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings to enforce any Transaction Document against any Obligor
or Subsidiary thereof or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

 

(n) The
Agent hereby appoints each other Purchaser as its agent (and each Purchaser hereby accepts such appointment) for the purpose of perfecting
the Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the UCC can be perfected by possession
or control. Should any Purchaser obtain possession or control of any such Collateral, such Purchaser shall notify the Agent thereof, and,
promptly upon the Agent’s request therefor shall deliver possession or control of such Collateral to the Agent or in accordance
with the Agent’s instructions.

 

(o) Each
Purchaser authorizes and directs the Agent to enter into this Agreement and the other Transaction Documents. Each Purchaser agrees that
any action taken by the Agent in accordance with the terms of this Agreement or the other Transaction Documents relating to the Collateral
and the exercise by the Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental
thereto, shall be binding upon all of the Purchasers.

 

    - 29 -

    

    

 

10. Miscellaneous.

 

(a) Waivers
and Amendments.

 

(i) No
amendment, consent, or waiver of any provision of this Agreement or any other Transaction Document, or consent to any departure by the
Obligors therefrom, shall in any event be effective unless the same shall be approved in writing and signed by the Required Purchasers
(or by the Agent with the consent of the Required Purchasers) and the applicable Obligor, as the case may be, and acknowledged by the
Agent, and then such amendment, consent or waiver shall be effective only in the specific instance and the specific purpose for which
given; provided, however, that no such amendment, consent or waiver shall, unless signed by the Agent, all of the Purchasers directly
and adversely affected thereby and the applicable Obligor, do any of the following:

 

(1) increase
the amount of or extend the expiration date of any Obligations of any Obligor,

 

(2) postpone
or delay any date fixed by this Agreement or any other Transaction Document for any payment of principal, interest, fees, or other amounts
due hereunder or under any other Transaction Document,

 

(3) reduce
the principal of, or the rate of interest on, any Note or other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Transaction Document,

 

(4) amend,
modify or eliminate this Section or any provision of this Agreement providing for consent or other action by all Purchasers,

 

(5) other
than as permitted by Section 9(k), release or subordinate the Agent’s lien in and to any of the Collateral, or

 

(6) amend,
modify or eliminate the definition of Required Purchasers, Pro Rata Share; or

 

(7) change
Section 2(d) or 2(e) in a manner that would alter the pro rata application required thereby;

 

provided, further,
that, notwithstanding anything herein to the contrary, no amendment, waiver or consent shall, unless in writing and signed by the Agent
in addition to the Purchasers required above, affect the rights or duties of the Agent under this Agreement or any other Transaction Document.

 

(ii) For
the avoidance of doubt, no consent of Obligors or of any Purchasers shall be required in connection with provisions that may be modified
with Agent’s consent in its sole or reasonable discretion.

  

(b) Application
of Payments. The Agent and Purchasers may apply any payments collected pursuant to this Agreement or the Notes, whether by exercise
of remedies or otherwise, to such of the Obligations as may then be due and payable as set forth in the Transaction Documents or as the
Agent and Required Purchasers shall determine.

 

    - 30 -

    

    

 

(c) Most
Favored Lender. If at any time the Issuer enters into a subsequent secured debt financing arrangement with any Person and the documentation
includes (a) covenants or events of default (including related definitions) in favor of such third-party that are not provided for in
this Agreement or the Notes, (b) covenants or events of default (including related definitions) in favor of such third-party, that are
more restrictive than the same or similar provisions provided for in this Agreement or the Notes and/or (c) requirements for such subsequent
financing, to be secured by collateral or guaranteed by Subsidiaries of the Issuer that are not already Guarantors hereunder (any or all
of the foregoing, collectively, the “Most Favored Lender Provisions”), then (i) such Most Favored Lender Provisions
shall immediately and automatically be deemed incorporated into this Agreement as if set forth fully herein and therein, mutatis mutandis,
and no such incorporated provision may thereafter be waived, amended or modified except pursuant to the provisions of Section 10(a),
and (ii) the Issuer and the Guarantors shall promptly so advise the Agent in writing. Thereafter, upon the request of the Agent, the Issuer
and the Guarantors shall enter into an amendment to this Agreement and the Notes (at the expense of the Issuer) evidencing the incorporation
of such Most Favored Lender Provisions, it being agreed that any failure to make such request or to enter into any such amendment shall
in no way qualify or limit the incorporation described in clause (i) of the immediately preceding sentence.

 

(d) Governing
Law; Jurisdiction.

 

(i) This
Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflicts of law provisions of the State of New York or of any other state.

 

(ii) Each
Obligor hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the state and federal
courts sitting in the Borough of Manhattan, City of New York, and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such New York state court or, to the extent permitted by applicable law,
such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other
Transaction Document shall affect any right that Agent or each Purchaser may otherwise have to bring any action or proceeding relating
to this Agreement or any other Transaction Document against any Obligor or any other Person or its properties in the courts of any jurisdiction.

 

(iii) Each
Obligor irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (ii) of this Section 10(d) and brought in any court referred to in paragraph (ii) of
this Section 10(d). Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(iv) Each
party to this Agreement irrevocably consents to the service of process in the manner provided for notices in Section 10(j). Nothing
in this Agreement or in any other Transaction Document will affect the right of any party hereto to serve process in any other manner
permitted by law.

 

(e) Survival.
The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

 

(f) Successors
and Assigns. Subject to the restrictions on transfer described in Sections 10(g) and 10(h) below, the rights
and obligations of the Obligors, Agent and each Purchaser shall be binding upon and benefit the respective successors, assigns, heirs,
administrators and transferees of such parties.

 

    - 31 -

    

    

 

(g) Registration,
Transfer and Replacement of the Notes. The Issuer will keep, at its Principal Office, books for the registration and registration
of transfer of the Notes. Prior to presentation of the Notes for registration of transfer, the Issuer shall treat the Person in whose
name each Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue,
and the Issuer shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in
any Note, the holder of such Note, at his/her/its option, may in person or by duly authorized attorney surrender the same for exchange
at the Principal Office, and promptly thereafter and at the Issuer’s expense, except as provided below, receive in exchange therefor
one or more new Note(s), which shall be for the same principal amount as the then unpaid principal amount of the Note(s) so surrendered
and shall be dated the date to which interest shall have been paid on the Note(s) so surrendered or, if no interest shall have yet been
so paid, dated the date of the Note(s) so surrendered, and registered in the name of such Person or Persons as shall have been designated
in writing by such holder or its attorney. Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any such Note and (i) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it; or (ii) in the case of mutilation, upon surrender thereof, the Issuer, at its expense, will execute and deliver
in lieu thereof a new Note executed in the same manner as the Note being replaced, and in the case of a lost, stolen or destroyed Note,
in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on
such Note or, if no interest shall have yet been so paid, dated the date of such Note.

 

(h) Assignment.
The rights, interests and obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by any Obligor
without the prior written consent of the Agent and the Purchasers. Each Purchaser may assign its interests and obligations hereunder or
any participation interests in the Notes and the Obligations thereunder, in whole or in part (i) at any time without consent of any Obligor
or any other person, to any of such Purchaser’s Affiliates, (ii) with Issuer’s prior written consent, such consent not to
be unreasonably delayed or withheld, and shall be deemed to be given and Issuer has not objected within 10 Business Days at any time with
consent to any non-Affiliate of such Purchaser or (iii) at any time without consent of any Obligor or any other person if any Event of
Default has occurred and is continuing, without consent.

 

(i) Entire
Agreement. This Agreement, together with the other Transaction Documents, constitutes and contains the entire agreement among the
Obligors, Agent and the Purchasers and supersedes any and all prior agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter hereof.

 

(j) Notices.
All communications provided for herein and, unless explicitly provided otherwise therein, in any of the other Transaction Documents shall
be in writing. Any such communication must be sent (i) if to Issuer or any Guarantor, to it at:

 

c/o 1847 Holdings LLC.

590 Madison Avenue, 21st Floor

New York, NY 10022

Attn: Ellery W. Roberts

Email:

 

or at such other address (or
telecopy number) as may be furnished in writing by Issuer or the Guarantors to Purchaser;

 

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

 

Bevilacqua PLLC.

1050 Connecticut Avenue, NW, Suite 500

Washington, DC 20036

Attn: Louis Bevilacqua

Email:

 

    - 32 -

    

    

 

(ii) if to Agent or Leonite,
to it at:

 

Leonite Capital LLC

1 Hillcrest Center Drive

Suite 232

Spring Valley, New York
10977

Attention: Avi Geller

 

(iii) if to Silac, to
it at the below applicable address:

 

Leonite Capital LLC

1 Hillcrest Center Drive

Suite 232

Spring Valley, New York
10977

Attention: Avi Geller

 

 

SILAC Insurance Company

c/o Antarctica Investment Advisors, LLC

630 Fifth Avenue, 20th Floor

New York, NY 10111

 

Attn: Andrew Bonita

Email:

 

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

 

Troutman Pepper Hamilton
Sanders LLP.

875 3rd Ave

New York, NY 10022

Attn: Patrick Costello

Email:

 

All such notices and communications
will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one Business Day
after being deposited with an overnight courier service of recognized standing, or (iv) four days after being deposited in the U.S.
mail, first class with postage prepaid.

 

    - 33 -

    

    

 

(k) Expenses;
Indemnification. Each party shall pay the fees and expenses of its respective counsel with respect to the negotiation, execution,
delivery, and performance of this Agreement and the Transaction Documents; provided, that Issuer shall reimburse the expenses of
Agent and Purchasers incurred in connection with the execution and delivery of this Agreement in an aggregate amount of up to $200,000.
In the event of the occurrence of an Event of Default hereunder or under any other Transaction Document, Obligors shall pay, jointly and
severally, all fees, costs and expenses (including, without limitation, legal fees and expenses) incurred by Agent or any Purchaser in
connection with the enforcement or collection of the Notes and the other Transaction Documents. Each Obligor agrees, jointly and severally,
to defend (with counsel reasonably satisfactory to the Agent and the Required Purchasers), protect, indemnify and hold harmless Agent,
each Purchaser, each Affiliate or subsidiary of Agent or any Purchaser, and each of their respective shareholders, members, officers,
directors, managers, employees, attorneys and agents (each an “Indemnified Party”) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature (including,
without limitation, the disbursements and the reasonable and documented fees of counsel for each Indemnified Party in connection with
any investigative, administrative or judicial proceeding, whether or not the Indemnified Party shall be designated a party thereto), which
may be imposed on, incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without limitation, securities laws and regulations and commercial laws
and regulations, under common law or in equity, or based on contract or otherwise) in any manner relating to or arising out of the Notes
or any other Transaction Document, or any act, event or transaction related or attendant thereto, the making or issuance and the management
of the investment evidenced by the Notes or the use or intended use of the proceeds of such Notes; provided, however, that
Obligors shall not have any obligation hereunder to any Indemnified Party with respect to matters caused by or resulting from the willful
misconduct or gross negligence of such Indemnified Party, as finally determined by a court of competent jurisdiction. To the extent that
the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy,
Obligors shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified Party on demand, and, failing prompt payment, shall, together
with interest thereon at the rate provided herein from the date incurred by each Indemnified Party until paid by Obligors, and shall constitute
obligations evidenced by the Notes. The provisions of this paragraph shall survive the satisfaction and payment of the obligations evidenced
by the Notes.

 

(l) Further
Assurances. Upon the reasonable request of the Agent, a Purchaser or any Obligor, the Agent, Purchasers or the Obligor, as the case
may be, agrees to take any and all actions, including, without limitation, the execution of certificates, documents or instruments, necessary
or appropriate to give effect to the transactions contemplated by this Agreement.

 

(m) Remedies.
In addition to the remedies set forth in the Notes, upon the occurrence or existence of any Event of Default, the Agent may, and at the
instruction of the Required Purchasers, shall exercise any other right, power or remedy granted to the Agent or the Purchasers by any
Transaction Document or otherwise permitted to them by law, either by suit in equity or by action at law, or both. Each Obligor acknowledges
that violation of any one or more of the terms of this Agreement or any other Transaction Document would immeasurably and irreparably
damage the Purchasers, and, accordingly, each Obligor agrees that for any violation or threatened violation of any of such terms, the
Purchasers shall (and the Agent has the right to enforce on the Purchasers’ behalf), in addition to any other rights and remedies
available to them, at law or otherwise (including, without limitation, the recovery of damages from the Obligors), be entitled to specific
performance and an injunction to be issued by any court of competent jurisdiction enjoining and restraining the Obligors, or any of them,
from committing any violation or threatened violation of the terms hereof.

 

    - 34 -

    

    

 

(n) Waivers
and Consents. No waiver, termination or discharge of this Agreement, or any of the terms or provisions hereof, or any consent hereunder
shall be binding upon any party hereto unless set forth in writing and signed by the party to be bound thereby. Any waiver of any term
or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver
of any term or condition of this Agreement. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising
from this Agreement shall operate or be construed as a waiver thereof; 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.
For the avoidance of doubt, the approval of any action by the board of directors or manager, as applicable, of any Obligor shall not be
deemed to be the consent of the Purchasers, regardless of whether any member of the board of directors or manager was appointed by a Purchaser.

 

(o) Subordination
of Intercompany Obligations. Any Indebtedness of any Obligor (the “Debtor-Obligor”) now or hereafter owing to any
other Obligor (the “Creditor-Obligor”) is here-by subordinated to the Obligations of such Debtor-Obligor owing to the
Agent and Purchasers; and if the Agent so requests at a time when an Event of Default exists, all such Indebtedness of such Debtor-Obligor
to such Creditor-Obligor shall be collected, enforced and received by such Creditor-Obligor for the benefit of the Agent and Purchasers
and be paid over to the Agent on behalf of the Purchasers on account of the Obligations, but without affecting or impairing in any manner
the liability of any Obligor under the other provisions of this Agreement and the Transaction Documents. Without limiting the generality
of the foregoing, any Liens granted by any Debtor-Obligor in favor of any Creditor-Obligor is hereby made subordinate and junior to the
Liens granted by such Debtor-Obligor to the Agent, for the benefit of the Purchasers.

 

(p) Severability
of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(q) Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing
or interpreting this Agreement.

 

(r) Counterparts.
This Agreement may be executed in any number of counterparts (including by way of electronic transmission), each of which shall be an
original, but all of which together shall be deemed to constitute one instrument.

 

(s) Time
Is of the Essence. Time is of the essence of this Agreement, and of each provision hereof.

 

(t) WAIVER
OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (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 HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

[Signature page follows]

 

    - 35 -

    

    

 

IN WITNESS WHEREOF, the parties
have caused this Note Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date
and year first written above.

 

	 	ISSUER:
	 	 	 
	 	1847 HOLDINGS LLC
	 	 	 
	 	By:	/s/ Ellery W. Roberts   
	 	Name:  	Ellery W. Roberts      
	 	Title:  	Chief Executive Officer

 

	 	GUARANTORS:
	 	 	 
	 	1847 WOLO INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	1847 CABINET INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	1847 ASIEN INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	ASIEN’S APPLIANCES, INC
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

     

    

    

 

	 	KYLE’S CUSTOM WOOD SHOP, INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	HIGH MOUNTAIN DOOR & TRIM INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	SIERRA HOMES LLC
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	WOLO INDUSTRIAL HORN & SIGNAL, INC.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman
	 	 	 

 

	 	WOLO MFG. CORP.
	 	 	 
	 	By:	/s/ Ellery W. Roberts
	 	Name:	Ellery W. Roberts
	 	Title:	Executive Chairman

 

	 	AGENT: 
	 	 
	 	LEONITE CAPITAL LLC
	 	 
	 	By:	/s/ Avi Geller
	 	Name:	Avi Geller
	 	Title:	Chief Investment Officer

 

     

    

    

 

	 	PURCHASERS:
	 	 	 
	 	LEONITE CAPITAL LLC
	 	 	 
	 	By:	/s/ Avi Geller
	 	Name:	Avi Geller
	 	Title:	Chief Investment Officer

 

	 	SILAC INSURANCE COMPANY
	 	 
	 	By:	/s/Andrew Bonita
	 	Name:	Andrew Bonita
	 	Title:	 Authorized Signatory for Antarctica Investment 

Advisors, LLC, as Attorney-in-Fact for SILAC

 Insurance CompanyExhibit 10.12

 

Execution Version

 

THIS NOTE HAS BEEN ISSUED WITH
“ORIGINAL ISSUE DISCOUNT” FOR U.S. FEDERAL INCOME TAX PURPOSES. THE ISSUER OF THIS NOTE WILL MAKE AVAILABLE TO ANY HOLDER
OF THIS NOTE: (1) THE ISSUE PRICE AND ISSUE DATE OF THIS NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS NOTE, (3) THE YIELD TO
MATURITY OF THIS NOTE, AND (4) ANY OTHER INFORMATION REQUIRED TO BE MADE AVAILABLE BY U.S. TREASURY REGULATIONS UPON RECEIVING A WRITTEN
REQUEST FOR SUCH INFORMATION TO CHIEF FINANCIAL OFFICER AT THE FOLLOWING ADDRESS: 1847 HOLDINGS LLC, 590 MADISON AVENUE, 21ST
FLOOR, NEW YORK, NY 10022.

 

NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

1847 HOLDINGS, LLC

 

SECURED CONVERTIBLE PROMISSORY
NOTE

 

	Dated as of:	October 8, 2021	Purchase Price:	$16,562,000.00
	Maturity Date:	October 8, 2026	Original Issue Discount:	$338,000.00
	 	 	Original Principal Amount:	$16,900,000.00 

 

October 8, 2021

 

FOR VALUE RECEIVED, 1847
HOLDINGS LLC, a Delaware limited liability company (the “Issuer”), with its principal executive office located
at 1847 Holdings LLC, 590 Madison Avenue, 21st Floor, New York, NY 10022 (the “Principal Office”), promises
to pay SILAC INSURANCE COMPANY (internal account no. SLO9) or its successors, assigns or designees (the “Purchaser”),
in lawful money of the United States of America the principal sum of Sixteen Million Nine Hundred Thousand Dollars ($16,900,000),
or such lesser amount as shall equal the outstanding principal amount hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to the Applicable Rate (the “Interest”). All unpaid principal, together with
any then unpaid and accrued Interest and other amounts payable hereunder, shall be due and payable on the earlier of: (i) the close
of business on October 8, 2026, or (ii) when, upon or after the occurrence of an Event of Default (as defined below), such amounts
become due and payable to the Purchaser in accordance with the terms hereof (the earliest of such dates being hereinafter referred to
as the “Maturity Date”). This Secured Convertible Promissory Note (this “Note”) is a “Note”
issued pursuant to the Note Purchase Agreement, dated of even date herewith, by and among the Issuer, the Guarantors party thereto, the
Purchaser, the other Purchasers party thereto, and Leonite Capital LLC, as administrative agent for the Purchasers (“Agent”)
(as may be further amended, restated, modified, or supplemented from time to time, the “Note Purchase Agreement”).

 

     

     

    

 

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

 

1.  Definitions.
As used in this Note, the following capitalized terms have the following meanings: 

(a)   “Applicable
Rate” means, at any date the same is to be determined, the greater of (i) a rate per annum equal to 4.75% plus the Benchmark
or (ii) 8%, which shall be calculated on the basis of a 360-day year and actual days elapsed.

 

(b)   “Benchmark”
means the U.S. Prime Rate that appears in The Wall Street Journal from time to time as determined by Agent.

 

(c)   “Default
Interest Rate” means the lesser of (i) 24% or (ii) the maximum legal rate.

 

(d)   “Event
of Default” has the meaning given in Section 4 hereof.

 

(e)   “Interest”
has the meaning given in the introductory paragraph hereof.

 

(f)   “Maturity
Date” has the meaning given in the introductory paragraph hereof.

 

(g)   “Subsequent
Financing” shall mean any offering by any Obligor of Equity Interests, equity linked securities, or unsecured Indebtedness
for cash. Subsequent Financing shall not include any offering of secured Indebtedness for which the Most Favored Lender Provisions apply
or offerings of Equity Interests or Indebtedness for consideration other than cash, including Seller Notes.

 

Additional capitalized terms
used herein and not otherwise defined herein shall have the meanings given to such terms in the Note Purchase Agreement.

 

2.  Payments
and Prepayments

.

 

(a)   Payments.
Payments of Interest only, computed at the Applicable Rate on the outstanding principal amount hereunder, shall be due and payable quarterly
in arrears commencing on January 1, 2022, and continuing on the first day of each calendar quarter thereafter through and including the
Maturity Date. All unpaid principal and any accrued and unpaid interest on this Note shall be due and payable on the Maturity Date. Each
payment or prepayment hereunder shall be subject to Section 2(d) of the Note Purchase Agreement.

 

(b) Default Interest.
Upon the occurrence and during the continuance of an Event of Default, interest shall accrue at the Default Interest Rate.

 

(c)   Voluntary
Prepayments. Subject to payment of any applicable Prepayment Fee, Issuer may prepay the Loan in whole or in part at any time, without
penalty.

 

    2

     

    

 

(d)   Mandatory
Prepayments.

 

(i)   Proceeds
of Issuances of Indebtedness. Immediately upon receipt by any Obligor of any proceeds from any issuance of Indebtedness (other than
Permitted Indebtedness) by any Obligor, Issuer shall prepay the Obligations in an amount equal to all such proceeds (whether or not such
proceeds are received by Issuer), net of reasonable and customary transaction costs, fees and expenses properly attributable to such transaction
and payable by the Obligors in connection therewith (in each case, paid to non-Affiliates). Any such prepayment shall be applied in accordance
with Section 2(d)(iii).

 

(ii)   Asset
Dispositions and Extraordinary Receipts. Immediately upon receipt by any Obligor of any proceeds of any sale or disposition by any
Obligor of any of the Collateral or any of its respective assets (other than asset sales or dispositions in the ordinary course of business
which are permitted by the Note Purchase Agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation
or similar proceedings, Issuer shall prepay the Obligations in an amount equal to all such proceeds (whether or not such proceeds are
actually received by Issuer), net of commissions and other reasonable and customary transaction costs, fees and expenses properly attributable
to such transaction and payable by Issuer in connection therewith (in each case, paid to non-Affiliates). Any such prepayment shall be
applied in accordance with Section 2(d)(iii).

 

(iii)   Application
of Prepayments. Any prepayments made pursuant to Section 2(d)(i) or (ii) shall be applied as follows: first,
to Agent’s and each Purchaser’s fees and reimbursable expenses then due and payable pursuant to any of the Transaction Documents
(including, without limitation, any applicable Prepayment Fee); second, to Interest then due and payable hereunder and under the
other Notes on a pro rata basis; and third, to the principal balance due on this Note and each of the other Notes on a pro
rata basis until the same shall have been paid in full.

 

(e)   Prepayment
Fee. In the event that any prepayment of the obligations evidenced by this Note occurs for any reason prior to the Maturity Date (including,
without limitation, following acceleration by the Agent or Purchasers upon the occurrence of an Event of Default), in view of the impracticality
and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of Purchaser’s
lost profits as a result thereof, the Issuer shall pay to the Purchaser a prepayment fee in an amount equal to 10% of the principal and
interest paid in connection with such prepayment (or then due and payable upon an acceleration by the Agent or Purchasers) (the “Prepayment
Fee”). For the avoidance of doubt, any Prepayment Fee owed by Issuer to Purchaser in accordance with this clause (e) shall be
in addition to any accrued and unpaid interest.

 

3.  Credit Support.
The Obligations and all other amounts owing hereunder are (i) guaranteed pursuant to the Guaranty, and (ii) secured by the Collateral
pursuant to the terms of the Security Agreement and the other Transaction Documents.

 

4.  Events of
Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note and
the other Transaction Documents:

 

(a) Failure to Pay.
The Issuer shall fail to pay, within two (2) Business Days following the due date thereof, any principal payment or any interest or other
payment required under the terms of this Note; or

 

(b)   Representations
and Warranties. Any representation or warranty made by any Obligor in the Note Purchase Agreement or any of the other Transaction
Documents shall prove to have been false or misleading when made (or, if applicable, when reaffirmed) in any material respect; or

 

 

    3

     

    

 

(c)   Covenants.
Any Obligor fails to timely and properly observe, keep or perform, any term, covenant, agreement or condition under (i) Section 5 in the
Note Purchase Agreement or (ii) under any other provision of the Note Purchase Agreement not specified in this Section 4 or any other
Transaction Document and such failure shall not have been remedied or waived within thirty (30) days after the earlier of (x) an officer
of such Obligor becoming aware of such failure or (y) receipt by the Issuer of notice from the Agent or Purchaser of such failure; or

 

(d)   Cross
Default. Any Obligor is in breach or default under any Indebtedness or other obligations (other than those evidenced by this Note),
which default is not cured within any applicable cure period set forth in the agreement with respect to the Indebtedness or other obligations
and which would cause or permit the holder of such Indebtedness or other obligations to accelerate the maturity thereof; or

 

(e)   Validity
of Transaction Documents. Any Obligor or any other Person shall challenge the validity and binding effect of any provision of any
of the Transaction Documents or shall state its intention to make such a challenge of any of the Transaction Documents or any of the Transaction
Documents shall for any reason (except to the extent permitted by its express terms) cease to be effective or to create a valid and perfected
security interest in any of the collateral purported to be covered thereby; or

 

(f)  Inability
to Pay Debts. Any Obligor admits in writing its present inability generally to pay its debts as they mature or shall make any assignment
for the benefit of any of its creditors; or

 

(g)   Judgments.
The entry of a final judgment for the payment of money involving more than $250,000 against any Obligor, and the failure by any Obligor
to discharge the same, or cause it to be discharged, within thirty (30) days from the date of the order, decree or process under which
or pursuant to which such judgment was entered; or

 

(h)   Suspension
of Business. Any Obligor suspends its business operations for more than ten (10) Business Days or terminates its business operations,
or liquidates, dissolves or terminates its existence; or

 

(i)  Voluntary
Bankruptcy or Insolvency Proceedings. Any Obligor shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its present inability,
to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable statute) as determined
by a court of competent jurisdiction, (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent
to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any of the foregoing; or

 

(j)  Involuntary
Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of any
Obligor or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to any Obligor or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter
in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 30 days of
commencement; or

 

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(k) Change of Control. The
occurrence of a Change of Control; or

 

(l)  Material Adverse
Effect. The occurrence of a Material Adverse Effect; or

 

(m)   SEC
Reports. The Issuer fails to timely file any document or report that it is required to file with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after giving effect to all applicable grace periods thereunder); or

 

(n) Restatement of Financial
Statements.  The Issuer restates any of its previously issued financial statements contained in any Quarterly Report on Form 10-Q
or Annual Report on Form 10-K filed with the Securities and Exchange Commission; or

 

(o) Delisting of Common
Shares. The delisting of the Issuer’s Common Shares from any principal market (presently the OTCQB); or

 

(p)   Continued
Listing Requirements. The Issuer’s failure to comply with the requirements for continued listing on a principal market for a
period of ten (10) consecutive trading days, or notification from the principal market that the Company is not in compliance with the
conditions for such continued listing on such principal market; or

 

(q) Trading Suspension. The
Issuer is subject to a trading suspension on the principal market that lasts for five or more consecutive trading days; or

  

(r)  DWAC/FAST.
The Issuer loses its ability to deliver shares via “DWAC/FAST” electronic transfer; or

 

(s)  DTC Eligibility. The
Issuer loses its status as “DTC Eligible”; or

 

(t)  Reservation of
Common Shares. The Issuer shall fail to reserve and keep available out of its authorized Common Shares 125% of the maximum number
of Common Shares issuable upon conversion of this Note pursuant to Section 7 hereof.

 

5.  Rights of
Agent and Purchasers upon Default. Upon the occurrence or existence of any Event of Default (other than an Event of Default described
in Sections 4(i) or 4(j)) and at any time thereafter during the continuance of such Event of Default, the Agent may
(or shall, at the direction of the Required Purchasers), by written notice to the Issuer, declare all outstanding Obligations payable
by the Issuer hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived. Upon the occurrence or existence of any Event of Default described in Sections 4(i) and
4(j), immediately and without notice, all outstanding Obligations payable by the Issuer hereunder shall automatically become immediately
due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived. In addition
to the foregoing remedies, upon the occurrence or existence of any Event of Default, (i) the Agent may (or shall, at the direction of
the Required Purchasers) exercise any other right, power or remedy granted to it by the Transaction Documents or otherwise permitted to
it by law, either by suit in equity or by action at law, or both, and (ii) the Issuer shall pay to the Agent, for the benefit of the Purchasers,
a fee in the amount of $10,000 each month until such time as the Agent confirms in writing that such Event of Default has been waived.

 

6.   Exchange
Rights. The Purchaser shall have the right (but not the obligation) to exchange this Note into securities sold in a Subsequent
Financing. At the time of the Subsequent Financing, Purchaser shall have the right to either: (i) retain the Note or the securities purchased
in a previous Subsequent Financing; or (ii) exchange the Note or such securities into the Subsequent Financing. The amount invested or
exchanged into the Subsequent Financing will be equal to the amount of this Note or investment in a previous Subsequent Financing.

 

    5

     

    

 

7.   Conversion
Right. The Purchaser shall have the right to convert this Note and accrued and unpaid Interest due under this Note into Common
Shares, as set forth in this Section 7.

 

(a)  Conversion
into Issuer’s Common Shares. The Purchaser shall have the right, from and after the date of the issuance of this Note and then
at any time until the Maturity Date, to convert any outstanding and unpaid principal portion of this Note, and any accrued but unpaid
Interest on such portion, at the election of the Purchaser (the date of such conversion being a “Conversion Date”)
into Common Shares at the Conversion Price (as hereinafter defined). Upon delivery to the Issuer of a completed Notice of Conversion,
a form of which is attached hereto as Exhibit A, the Issuer shall issue and deliver to the Purchaser within five (5) business days
after the Conversion Date (such day being the “Delivery Date”) that number of Common Shares for the portion of the
Note and any accrued but unpaid Interest on such portion converted in accordance with the following sentence. The number of Common Shares
to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal of the Note to be converted
and any accrued but unpaid Interest on such portion, by the Conversion Price. The “Conversion Price” shall initially
be $2.50 per Common Share, and shall be subject to adjustment as provided hereafter in this Section 7.

 

(b)  Manner
of Conversion. This Note may be converted by the Purchaser by presentment of this Note, accompanied by written notice stating that
Purchaser elects to convert all or a portion of the principal amount hereof, and any accrued but unpaid Interest on such portion, and
stating the name or names, together with addresses, in which the Common Shares are to be issued. Each conversion shall be deemed to have
been effected immediately prior to the close of business on the date on which this Note shall have been so surrendered to Issuer; and
at such time the rights of the Purchaser as to that portion of this Note so converted shall cease, and the person in whose name or names
the Common Shares shall be issuable upon such conversion shall be deemed to have become the holder or holders of record thereof. If this
Note is converted in part only, upon conversion of such part hereof, the Issuer shall execute and deliver to the Purchaser upon surrender
of this Note a new Note in the aggregate principal amount equal to the then unconverted portion of the principal amount of this Note plus
any accrued but unpaid and unconverted Interest and in all other respects identical to this Note.

 

(c)  Distributions,
Splits, Combinations, Reclassifications. In the event the Issuer shall hereafter (i) pay a stock dividend or otherwise makes a distribution
or distributions payable in shares of Common Shares on the Common Shares, (ii) subdivide the outstanding Common Shares into a larger number
of shares, (iii) combine (including by way of a reverse stock split) outstanding Common Shares into a smaller number of shares or (iv)
issue, in the event of a reclassification of Common Shares, any shares of capital stock of the Company, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number Common Shares (excluding any treasury shares of the Issuer) outstanding
immediately before such event, and of which the denominator shall be the number of Common Shares outstanding immediately after such event.
All adjustments made pursuant to this Section 7(c) shall become effective immediately after the earlier of the record date or the
payment date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision
or combination.

 

(d)  Sale of
Common Shares Below Conversion Price.

 

(i)   Reduction
of the Conversion Price. If at any time or from time to time after the date this Note is issued, the Issuer issues or sells, or is
deemed by the provisions of this Section 7(d) to have issued or sold, Additional Common Shares (as hereinafter defined), other
than as provided in Section 7(c) above, for an Effective Price (as hereinafter defined) less than the Conversion Price then in
effect, then the Conversion Price shall be reduced, as of the opening of business on the date of such issue or sale, to a price equal
to the Effective Price.

 

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(ii) Determination of
Consideration. For the purpose of making any adjustment required under this Section 7(d), the consideration received by the
Issuer for any issue or sale of securities shall (A) to the extent it consists of cash, be the amount of cash received by the Issuer
therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Issuer for any underwriting or
otherwise in connection thereof, (B) to the extent it consists of property other than cash, be computed at the fair market value
of that property (1) as determined in good faith by the Manager, and (2) such determination is agreed upon by Purchaser, and (C) if Additional
Common Shares, Convertible Securities (as hereinafter defined) or rights or options to purchase either Additional Common Shares or Convertible
Securities are issued or sold together with other securities or other assets of the Issuer for a consideration which covers both, be
computed as the portion of the consideration so received that (1) may be reasonably determined in good faith by the Issuer’s Board
of Directors, and (2) such determination is agreed upon by Purchaser, to be allocable to such Additional Common Shares, Convertible
Securities or rights or options. Should Purchaser not agree with the determination of the Issuer’s Board of Directors as provided
in this Section 7(d)(ii) (or such determination of the Board of Directors as set forth in Section 7(f) below or any dispute
pursuant to Section 7(i) below) and such differences are not resolved by mutual agreement of the Issuer and Purchaser within thirty
(30) days thereafter, then Issuer and Required Purchaser shall jointly engage an independent investment banking firm or valuation firm
(the “Appraiser”) to resolve all such differences, with the costs and expenses of such Appraiser to be shared equally
between the Issuer, on the one hand, and Purchasers, on the other hand. The Appraiser shall, acting as an expert and not as an arbitrator,
determine in accordance with the terms of this Note the remaining differences so submitted by the parties. The parties shall direct the
Appraiser to use all reasonable efforts to render its determination within thirty (30) days after such submission. The Appraiser’s
determination shall be set forth in a written statement and shall be final, binding, conclusive and non-appealable for all purposes.

 

(iii) Treatment of Convertible
Securities. For the purpose of the adjustment required under this Section 7(d), if the Issuer issues or sells any options,
rights or other securities convertible into, exchangeable for or entitling the holder thereof to receive Common Shares (such options,
rights or other securities being herein referred to as “Convertible Securities”), in each case the Issuer shall be
deemed to have issued at the time of the issuance of such Convertible Securities the maximum number of Common Shares issuable upon conversion,
exchange or exercise thereof and to have received as consideration for such issuance an amount equal to the total amount of the consideration,
if any, received by the Issuer for the issuance of such Convertible Securities, and allocable to the Convertible Securities as provided
in subsection (ii)(C) hereof, plus, the amount of consideration, if any, payable to the Issuer upon the conversion, exchange or exercise
of such Convertible Securities (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities); provided
that if the amounts of such consideration cannot be ascertained but are a function of anti-dilution or similar protective clauses, the
Issuer shall be deemed to have received the amounts of consideration without reference to such clauses; and provided further that if
the amount of consideration payable to the Issuer upon the conversion, exchange or exercise of Convertible Securities is reduced (or
increased) over time or on the occurrence or non-occurrence of specified events other than by reason of anti-dilution adjustments, the
Effective Price shall be recalculated using the figure to which such amount of consideration is reduced or increased, as the case may
be. No further adjustment of the Conversion Price, as adjusted upon the issuance of such Convertible Securities, shall be made as a result
of the actual issuance of Common Shares on the conversion, exchange or exercise of any such Convertible Securities.

 

(iv)   Excluded
Issuances. For purposes of this Note, the term “Additional Common Shares” shall mean all Common Shares issued or
sold by the Issuer or deemed to be issued or sold pursuant to this Section 7(d), whether or not subsequently reacquired or retired
by the Issuer, other than Permitted Issuances.

 

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(v)   Effective
Price. For purposes of this Note, the term “Effective Price” of Additional Common Shares shall mean the quotient
determined by dividing the total number of Additional Common Shares issued or sold, or deemed to have been issued or sold by the Issuer
under this Section 7(d), into the aggregate consideration received, or deemed to have been received by the Issuer for such issue
under this Section 7(d), for such Additional Common Shares. The issuance or deemed issuance of Additional Common Shares for no
consideration shall be deemed to be an issuance at a per unit consideration of $.001.

 

(e)  Purchaser’s
Conversion Limitations. The Issuer shall not effect any conversion of this Note, to the extent that after giving effect to the conversion
as set forth on the applicable Notice of Conversion, the Purchaser (together with the Purchaser’s Affiliates, and any other Persons
acting as a group together with the Purchaser or any of the Purchaser’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence,
the number of Common Shares beneficially owned by the Purchaser and its Affiliates and Attribution Parties shall include the number of
Common Shares issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number
of Common Shares which would be issuable upon (i) conversion of the remaining, nonconverted principal amount of this Note beneficially
owned by the Purchaser or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Issuer (including, without limitation, any other Common Share Equivalents) subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by the Purchaser or any of its Affiliates or
Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 7(e), beneficial ownership shall
be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Purchaser that the Issuer is not representing to the Purchaser that such calculation is in compliance with Section 13(d) of the
Exchange Act and the Purchaser is solely responsible for any schedules required to be filed in accordance therewith. To the extent that
the limitation contained in this Section 7(e) applies, the determination of whether this Note is convertible (in relation to other
securities owned by the Purchaser together with any Affiliates and Attribution Parties) and of which principal amount of this Note is
convertible shall be in the sole discretion of the Purchaser, and the submission of a Notice of Conversion shall be deemed to be the Purchaser’s
determination of whether this Note is convertible (in relation to other securities owned by the Purchaser together with any Affiliates
and Attribution Parties) and of which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation,
and the Issuer shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 7(e), in determining the number of outstanding Common Shares, a Purchaser
may rely on the number of outstanding Common Shares as reflected in (A) the Issuer’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Issuer, or (C) a more recent written notice by the
Issuer or the Transfer Agent setting forth the number of Common Shares outstanding.  Upon the written or oral request of a Purchaser,
the Issuer shall within two (2) Trading Days confirm orally and in writing to the Purchaser the number of Common Shares then outstanding. 
In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities
of the Issuer, including this Note, by the Purchaser or its Affiliates or Attribution Parties since the date as of which such number of
outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares
of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares issuable upon conversion of this Note.
The Purchaser, upon notice to the Issuer, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 7(e),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Shares outstanding immediately
after giving effect to the issuance of Common Shares upon conversion of this Note held by the Purchaser and the provisions of this Section
7(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Issuer. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 7(e) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor Purchaser of this Note.

 

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(f)  Recapitalizations,
Reorganizations, etc. In the event of any recapitalization, reorganization, consolidation or merger of the Issuer with or into
another Person or the sale, transfer or other disposition of all or substantially all of the assets of the Issuer and its Subsidiaries
(taken as a whole) to another Person, this Note shall thereafter be convertible into the kind and amount of Equity Interests or other
securities or property that a holder of the number of Common Shares deliverable upon conversion of this Note would have been entitled
upon such recapitalization, reorganization, consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in
good faith by the Issuer’s Board of Directors and such determination is agreed upon by the Purchaser) shall be made in the
application of the provisions set forth in this Section 7 with respect to the rights and interests thereafter of the Purchaser,
to the end that the provisions set forth in this Section 7 shall thereafter be applicable, as nearly as reasonably may be,
in relation to any Equity Interests or other securities or property thereafter deliverable upon conversion of this Note.

 

(g)  De Minimis
Adjustments. No adjustment to the Conversion Price shall be made if such adjustment would result in a change in the Conversion Price
of less than $.01. Any adjustment of less than $.01 that is not made shall be carried forward and shall be made at the time of and together
with any subsequent adjustment that, on a cumulative basis, amounts to an adjustment of $.01 or more in the Conversion Price.

 

(h)  No Impairment.
Neither the Issuer nor any Guarantor shall, by amendment of its governing documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the Issuer and the Guarantors, but shall at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in the taking of all such action as may be necessary
or appropriate in order to protect the conversion rights of the Purchaser against impairment.

 

(i)  Certificate
as to Adjustments; Dispute. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 7,
the Issuer at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to the Purchaser a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Issuer shall, upon the written request at any time of the Purchaser, furnish or cause to be
furnished to the Purchaser a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at that time in effect, and (iii) the number of Common Shares and the amount, if any, of other property that at that time would
be received upon the conversion of this Note. In the event Purchaser at any time objects to the calculation of any adjustment or readjustment
of the Conversion Price, the parties shall engage the Appraiser pursuant to and in accordance with the methodology and terms set forth
in Section 7(d)(ii) above.

 

(j)  Notices
of Record Date. In the event of any taking by the Issuer or Guarantor of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any distribution, any Convertible Securities or any right to subscribe
for, purchase or otherwise acquire any Equity Interests or any other securities or property, or to receive any other right, the Issuer
shall mail to the Purchaser, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such distribution or rights, and the amount and character of such distribution or rights.

 

    9

     

    

 

8.   Right
of Participation in Securities Offerings. Until the date that is eighteen (18) months after the Closing Date, the Purchaser shall
have the right, but not the obligation, to participate in any securities offering of the Issuer other than a Permitted Issuance in an
amount of up to the original principal amount of this Note. Issuer shall give Purchaser at least thirty (30) days prior written notice
of the launch of such next securities offering, which notice shall (1) identify each other proposed purchaser expected to be participating
in such securities offering and contain the expected terms and pricing thereof as of the date of such notice, and (2) be delivered to
Purchaser’s address set forth in the Note Purchase Agreement. Purchaser may decline to participate in any such securities offering
in its sole discretion.

 

9.  Right of First
Refusal. The Purchaser shall have the right of first refusal to participate in any issuance of Indebtedness by the Issuer until
this Note has been terminated; provided, however, that this right of first refusal shall not apply to Permitted Issuances.

 

10.  Successors
and Assigns. Subject to the restrictions on transfer described in Sections 11 and 12 below, the rights and obligations
of the Issuer and the Purchaser shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the
parties.

 

11.  Waiver and
Amendment. No waiver, termination or discharge of this Note, or any of the terms or provisions hereof, shall be binding upon either
party hereto unless set forth in writing and signed by the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any term or condition
of this Note. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Note shall operate
or be construed as a waiver thereof; 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.

 

12.  Transfer
of this Note or Securities Issuable on Conversion Hereof. Purchaser may assign this Note and its interests and obligations hereunder,
as well as any securities into which this Note may be converted, in whole or in part or sell participations in this Note and its interests
in the Obligations hereunder, in each case in accordance with Section 10(h) of the Note Purchase Agreement. Each Note thus transferred
and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability
in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Issuer such legend is not required in
order to ensure compliance with the Securities Act. The Issuer may issue stop transfer instructions to its transfer agent in connection
with such restrictions. Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Issuer. Prior to presentation of this Note for registration of transfer, the Issuer shall treat the registered
holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for
all other purposes whatsoever.

 

13.  Assignment
by the Issuer. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Issuer without the prior written consent of the Purchaser.

 

14.  Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall in writing and faxed,
mailed or delivered to each party at the respective addresses of the parties set forth in the Note Purchase Agreement, or at such other
address, e-mail address or facsimile number as each party shall have furnished to the other party in writing. All such notices and communications
will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one Business Day after
being deposited with an overnight courier service of recognized standing or (iv) four days after being deposited in the U.S. mail,
first class with postage prepaid.

 

    10

     

    

 

15.  Usury.
In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against
the principal of this Note.

 

16.  Waivers.
The Issuer hereby waives notice of acceptance, default, presentment or demand for payment, protest or notice of nonpayment or dishonor
and all other notices or demands relative to this instrument.

 

17.  Governing
Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law provisions of the State of New York or of any other state.

 

18.  WAIVER OF
JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS NOTE OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (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 HERETO HAVE BEEN INDUCED TO ENTER INTO THIS NOTE
AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

19.  Time Is of
the Essence. Time is of the essence of this Note, and of each provision hereof.

 

20.  Characterization
as Indebtedness. It is the express intent of the Issuer, the Guarantors and the Purchaser that, prior to conversion of this Note
as contemplated in Section 7 above, the obligations of the Issuer hereunder shall constitute indebtedness for borrowed money, and
not equity. In furtherance of the foregoing, each of the Issuer, the Guarantors and the Purchaser shall reflect their rights and obligations
hereunder in their books and records as indebtedness for borrowed money, and not as equity.

 

[Signature Page Follows]

 

    11

     

    

 

The Issuer has caused this
Secured Convertible Promissory Note to be issued as of the date first written above.

 

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

  

[SIGNATURE PAGE TO SECURED CONVERTIBLE PROMISSORY
NOTE]

 

     

    

    

 

Execution Version

  

EXHIBIT A

 

FORM OF 

 

NOTICE OF CONVERSION

 

(To be executed by the Purchaser
in order to convert the Note)

 

The undersigned hereby elects
to convert $___________ of the Principal and accrued but unpaid Interest with respect to the Secured Convertible Promissory Note issued
by 1847 HOLDINGS LLC on October 8, 2021 into Common Shares of 1847 HOLDINGS LLC according to the conditions set forth in such Secured
Convertible Promissory Note, as of the date written below.

 

	Date of Conversion:	
	 	 
	Conversion Price:	
	 	 
	Common Shares To Be Delivered:	
	 	 
	Signature	
	 	 
	Print Name:	
	 	 
	Address:

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