Document:

efsh_ex102.htm

EXHIBIT 10.2
  
 AMENDMENT NO. 1
 TO THE
 ASSET PURCHASE AGREEMENT
  
 This AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT (this “Amendment”), dated as of April 5, 2019, is entered into by and among 1847 Goedeker Inc., a Delaware corporation (“Buyer”), 1847 Goedeker Holdco Inc., a Delaware corporation (“Holdco”), Goedeker Television Co., Inc., a Missouri corporation (“Seller”), and Steve Goedeker and Mike Goedeker (the “Stockholders”, and each individually, a “Stockholder”). 
  
 RECITALS
  
 A. The Buyer, the Seller and the Stockholders have previously entered in that certain Asset Purchase Agreement, dated January 18, 2019 (the “Asset Purchase Agreement”).
  
 B. The parties hereto desire to amend the Asset Purchase Agreement as set forth herein.
  
 C. Pursuant to Section 7.2 of the Asset Purchase Agreement, the Asset Purchase Agreement may be amended by the Parties only by an instrument in writing signed on behalf of the Buyer, the Seller and the Stockholders.
  
 D. Holdco is a wholly-owned subsidiary of 1847 Holdings LLC, a Delaware limited liability company, and the parent company of Buyer.
  
 AGREEMENT
  
 NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:
  
 1. Definitions. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Asset Purchase Agreement.
  
 2. Amendments. 
  
 a. Section 1.4(a) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety to read as follows:
  
 “In consideration for the sale, assignment and delivery of the Purchased Assets, Buyer shall (i) pay an aggregate purchase price equal to Six Million, Two Hundred Thousand Dollars ($6,200,000) (the “Purchase Price”), as the same may be adjusted pursuant to this Agreement, payable in accordance with this Section 1.4(a) on the Closing Date, (ii) assume the Assumed Liabilities and (iii) issue to each of Steve Goedeker and Michael Goedeker shares of the Common Stock of Holdco equal to 11.25% non-dilutable interest in all of the issued and outstanding common stock of Holdco as of the Closing Date (the “Holdco Shares”).”
  
 b. Section 2.3 is hereby added to the Asset Purchase Agreement as follows:
  
 “2.3 Representations and Warranties of Holdco. Holdco represent and warrant to, and agrees with, the Seller and the Stockholders as follows:
   	 
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 (a) Organization. Holdco is a corporation duly incorporated and in good standing under the laws of the State of Delaware. 
  
 (b) Binding Obligation. Holdco has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. All corporate acts and other proceedings required to be taken by Holdco to authorize the execution, delivery and performance by Holdco of this Agreement and the transactions contemplated hereby, have been duly and properly taken. This Agreement has been duly-executed and delivered by Holdco and constitutes the legal, valid and binding obligation of Holdco, enforceable against Holdco in accordance with its terms. The execution, delivery and performance by Holdco of this Agreement does not and will not conflict with, or result in any violation of, any provision of the Certificate of Incorporation or Bylaws of Holdco, or any provision of any law, ordinance, rule, regulation, judgment, order, decree, agreement, instrument or license applicable to Holdco or to its respective property or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Holdco in connection with its execution, delivery or performance of this Agreement.
  
 (c) Full Disclosure. No representation or warranty by Holdco in this Agreement and no statement contained in any schedule to this Agreement or any certificate or other document furnished or to be furnished to the Seller or the Stockholders pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.”
  
 c. Section 4.7 as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:
  
 “Bylaws of Holdco. The Stockholders acknowledge and agree that the Holdco Shares and the transfer thereof are governed by the terms and provisions of the bylaws of Holdco and the Stockholders shall not sell, assign, pledge or otherwise transfer all or any portion of the Holdco Shares or any right or interest therein, whether voluntarily, involuntarily, by operation of law, by gift or otherwise, except by a transfer which meets the requirements specified in the bylaws of the Buyer. The Stockholders shall otherwise comply with the provisions of the bylaws of Holdco as they relate to the Holdco Shares.”
  
 d. A new Section 4.10 is added to the Asset Purchase Agreement, which new section shall be captioned “Nonassignable Contracts” and shall read in its entirety as follows:
  
 “4.10 Nonassignable Contracts. This Agreement shall not constitute an assignment or an attempted assignment of that certain Digital Marketing Agreement with Power Digital Marketing (the “Marketing Agreement”). The Seller shall cooperate with the Buyer in determining a reasonable arrangement designed to provide for the Buyer the benefits under the Marketing Agreement. In consideration for Seller so cooperating, Buyer shall pay to Seller on the date hereof a total of $20,000 which amount Seller shall use to pay Power Digital Marketing for amounts due under the Marketing Agreement for services to be rendered during the months of April 2019 and May 2019. Seller shall cause the Marketing Agreement to be terminated as of May 30, 2019 to ensure that Seller no longer has any obligations under the Marketing Agreement.”
  
  	 
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 e. A new Section 4.11 is added to the Asset Purchase Agreement, which new section shall be captioned “Release of Tax Lien” and shall read in its entirety as follows:
  
 “4.11 Release of Tax Lien. The Seller hereby agrees to use commercially reasonable efforts to have released within 60 days of the Closing Date that certain Missouri Department of Revenue tax lien (Lien Number 200226705001967) and to provide Buyer with evidence of such release.”
  
 f. Section 5.3(a) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:
  
 “Representations and Warranties. The representations and warranties of Buyer and Holdco set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and the Seller shall have received a certificate signed by the chief financial officer of the Buyer and Holdco to such effect.”
  
 g. Section 5.3(b) as set forth in the Asset Purchase Agreement shall be amended and restated in its entirety as follows:
  
 “Performance of Obligations of Buyer and Holdco. Each of Buyer and Holdco shall have performed all obligations required to be performed by it and this Agreement prior to the Closing Date, and the Seller shall have received a certificate signed by the chief financial officer of Buyer and Holdco to such effect.
  
 h. Each reference to “Buyer Shares” in the Asset Purchase Agreement is hereby amended to read, and each such reference is hereby deemed to refer to, “Holdco Shares.” 
  
 3. Joinder. Holdco hereby agrees, effective as of the date hereof, to become a party to the Asset Purchase Agreement, as amended by this Amendment. 
  
 4. Effect of Amendment. Except as amended as set forth above, the Asset Purchase Agreement shall continue in full force and effect. In the event of a conflict between the provisions of this Amendment and the Asset Purchase Agreement, this Amendment shall prevail and govern. 
  
 5. Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.
  
 6. Governing Law. This Amendment shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Missouri. Any dispute shall be resolved by arbitration conducted in St. Louis Missouri, in accordance with Chapter 435 of the Missouri Revised Statutes. The provisions of this Section 5 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.
  
 [Signature page follows]
   	 
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 IN WITNESS WHEREOF, the Buyer, Holdco, the Seller and the Stockholders have executed this Amendment as of the date first written above.
   	 BUYER:
  
1847 GOEDEKER INC.
	 	 SELLER:
   
GOEDEKER TELEVISION CO., INC.
	
	  
	  
	 	 	 	 
	 By:
	 /s/ Robert D. Barry
		By:	/s/ Steve Goedeker	
	 Name:
	 Robert D. Barry
	  
	 Name:
	Steve Goedeker	 
	 Title:
	 Chief Financial Officer
	 	Title:	President	 
	  
	  
	 	 	 	 
	 HOLDCO:
  
 1847 GOEDEKER HOLDCO INC.
	  
	 13850 Manchester Rd.
 Ballwin, MO 63011
 Attention: Steve Goedeker
	  

	  
	  
	  
	 Facsimile:
	  

	 By:
	 /s/ Robert D. Barry
	  
	 Email: tevegoedeker@gmail.com
	  

	 Name:
	 Robert D. Barry
	  
	  
	  
	  

	 Title:
	 President
	  
	 with a copy, which shall not constitute notice to Seller, to:

  
  	 In each case:
 c/o 1847 Holdings LLC
 590 Madison Avenue, 21st Floor
 New York, NY 10022
 Attn: Robert D. Barry, CFO
 Facsimile: 
 email:   rbarry2@nc.rr.com
 bbarry@1847holdings.com 
   
 with a copy, which shall not constitute notice to Buyer or Holdco, to:
    
 BEVILACQUA PLLC
 1050 Connecticut Avenue, NW
 Suite 500
 Washington, DC 20036
 Attention: Louis A. Bevilacqua, Esq.
 Email: lou@bevilacquapllc.com
	 Carmody MacDonald
 120 S. Central Avenue
 Suite 1800
 St. Louis, MO 63105
 Attn: Donald R. Carmody
 Facsimile:
 Email: drc@carmodymacdonald.com

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

  
 	 13850 Manchester Rd.
 Ballwin, MO 63011
Attention: Steve Goedeker Facsimile:
 Email: stevegoedeker@gmail.com
      
with a copy, which shall not constitute notice to the Stockholder, to:
    
 Carmody MacDonald
 120 S. Central Avenue
 Suite 1800
 St. Louis, MO 63105
 Attn: Donald R. Carmody
 Facsimile:
 Email: drc@carmodymacdonald.com
	 13850 Manchester Rd.
 Ballwin, MO 63011
 Facsimile: 
 Email:
   
  
 with a copy, which shall not constitute notice to the Stockholder, to:
    
 Carmody MacDonald
 120 S. Central Avenue
 Suite 1800
 St. Louis, MO 63105
 Attn: Donald R. Carmody
 Facsimile:
 Email: drc@carmodymacdonald.com

    
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EXHIBIT 10.3
  
 This instrument and the indebtedness evidenced hereby, and the rights and remedies of the holders of this instrument, are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (Respecting Seller Note and Earn Out Payments) (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions thereof, the “Subordination Agreement”) dated as of April 5, 2019, by and among Goedeker Television Co., Inc., a Missouri corporation, and Burnley Capital LLC, a Delaware limited liability company, to the Senior Indebtedness (as defined in the Subordination Agreement); and each holder of this instrument, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement.
  
 This instrument and the indebtedness evidenced hereby, and the rights and remedies of the holders of this instrument, are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (Respecting Seller Note and Earn Out Payments) (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions thereof, the “Subordination Agreement”) dated as of April 5, 2019, by and among Goedeker Television Co., Inc., a Missouri corporation, and Small Business Community Capital L.P., a Delaware limited liability company, to the Senior Indebtedness (as defined in the Subordination Agreement); and each holder of this instrument, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement.
  
 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
  
 1847 GOEDEKER INC.
  
 9% SUBORDINATED PROMISSORY NOTE
  
 	 US $4,100,000
	 ______________April 5, 2019

  
 FOR VALUE RECEIVED, 1847 Goedeker Inc., a Delaware corporation (the “Company”), promises to pay to Steve Goedeker, in his capacity as the Sellers’ Representative (the “Holder”), the principal sum of Four Million, One Hundred Thousand Dollars ($4,100,000.00) (the “Principal”) in lawful money of the United States of America, with interest payable thereon at the rate of nine percent (9%) per annum. The unpaid principal amount hereof and all accrued but unpaid interest thereon shall be paid in full to the Holder on the fifth (5th) anniversary of the date of this Note (the “Maturity Date”). 
  
 Capitalized terms used herein but not defined herein shall have the meaning ascribed to them in that certain Asset Purchase Agreement, dated January 18, 2019 (the “Purchase Agreement”), among the Company, the Holder, Mike Goedeker and Goedeker Television Co., Inc. (the “Seller”), pursuant to which the Company acquired all or substantially all of the assets of the Seller. 
   	 
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 The following is a statement of the rights of the Holder of this Note and the terms and conditions to which this Note is subject, and to which the Holder, by acceptance of this Note, agrees:
  
 1. Principal Repayment. The outstanding principal amount of this Note shall be amortized on a five-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to this Note (the “Amortization Schedule”) with all of the unpaid principal being fully paid on the Maturity Date, unless this Note has been earlier redeemed. Notwithstanding the foregoing, upon the sale of all or substantially all of the assets of the Company or a sale by 1847 Holdings LLC to an unaffiliated third party of a controlling interest in the Company (whether such sale takes place through a merger, share exchange, stock sale or other structure), the unpaid principal amount and all accrued but unpaid Interest thereon shall automatically become due and payable and the proceeds of any such sale, after the payment of obligations to the Senior Indebtedness, shall be first used to repay amounts due under this Note. 
  
 2. Interest. 
  
 (a) Computation. Interest (the “Interest”) shall accrue on the unpaid principal amount of this Note from the date hereof until such principal amount is repaid in full at the rate of nine percent (9%) per annum. Interest shall be paid in accordance with the Amortization Schedule with all unpaid Interest being paid on the Maturity Date or the date of the redemption of this Note. All computations of the Interest rate hereunder shall be made on the basis of a 360-day year of twelve 30-day months. In the event that any Interest rate provided for herein shall be determined to be unlawful, such Interest rate shall be computed at the highest rate permitted by applicable law. Any payment by the Company of any Interest amount in excess of that permitted by law shall be considered a mistake, with the excess being applied to the principal of this Note without prepayment premium or penalty. 
  
 (b) Taxes, Charges, and Expenses. The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.
  
 3. Redemption. The Company will have the right to redeem all or any portion of the Note at any time prior to the Maturity Date without premium or penalty of any kind. The redemption price will be payable in cash and is equal to the then outstanding principal amount of this Note plus accrued but unpaid interest thereon. 
  
 4. Events of Default. In the event that any of the following (each, an “Event of Default”) shall occur:
   	 
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 (a) Non-Payment. The Company shall default in the payment of the principal of, or accrued interest on, this Note as and when the same shall become due and payable, whether by acceleration or otherwise; or
  
 (b) Default in Covenants. The Company shall default in any material manner in the observance or performance of any covenants or agreements set forth in any of the Transaction Documents; or
  
 (c) Breach of Representations and Warranties. The Company materially breaches any representation or warranty contained in the Transaction Documents; or
  
 (d) Illegality of Note. Any court of competent jurisdiction issues an order declaring the Note or any provision thereunder to be illegal; 
  
 (e) Cross Default. There occurs with respect to any Senior Indebtedness (as defined below): (i) a default with respect to any payment obligation thereunder that then entitles the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity, or (ii) any other default thereunder that entitles, and has caused, the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity; or
  
 (f) Bankruptcy. The Company shall: (i) admit in writing its inability to pay its debts as they become due; (ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any of its property, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for any part of its property; or (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if such case or proceeding is not commenced by the Company or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Company or shall result in the entry of an order for relief; 
  
 then, and so long as such Event of Default is continuing for a period of two (2) business days in the case of non-payment under Section 4(a) or for a period of thirty (30) calendar days in the case of events under Sections 4(b) through 4(d) or for a period of five (5) calendar days in the case of an event under Section 4(e) (and the event which would constitute such Event of Default, if curable, has not been cured), by written notice to the Company from the Holder, all obligations of the Company under this Note shall be immediately due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, and Holder may exercise any other remedies the Holder may have at law or in equity. If an Event of Default specified in Section 4(f) above occurs, the principal of, and accrued interest on, the Note shall automatically, and without any declaration or other action on the part of any Holder, become immediately due and payable.
  
 5. Affirmative Covenants of the Company. The Company hereby agrees that, so long as the Note remains outstanding and unpaid, or any other amount is owing to the Holder hereunder, the Company will:
   	 
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 (a) Corporate Existence and Qualification. Take the necessary steps to preserve its corporate existence and its right to conduct business in all states in which the nature of its business requires qualification to do business;
  
 (b) Compliance with Law. Comply with the charter and bylaws or other organizational or governing documents of the Company, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon the Company or any of its property or to which each of the Company or any of its properties is subject;
  
 (c) Taxes. Duly pay and discharge all taxes or other claims, which might become a lien upon any of its property except to the extent that any thereof are being in good faith appropriately contested with adequate reserves provided therefor;
  
 (d) Further Assurances. The Company shall execute and deliver any and all such further documents and take any and all such other actions as may be reasonably necessary or appropriate to carry out the intent and purposes of this Note and to consummate the transactions contemplated herein.
  
 6. Subordination.
  
 (a) All claims of the Holder to principal, interest and any other amounts at any time owed under this Note (collectively, “Junior Indebtedness”) is hereby expressly subordinated in right of payment, as herein set forth, to the prior payment in full of all Senior Indebtedness (as defined below). No payment under Junior Indebtedness shall be made by the Company, nor shall the Holder exercise any remedies under the Junior Indebtedness (including taking any legal action (whether judicial or otherwise) to collect the Junior Indebtedness), if, at the time of such payment, exercise or immediately after giving effect thereto, (i) there shall exist any material “Default” or “Event of Default” under any agreements governing any of the Senior Indebtedness or (ii) the maturity of any of the Senior Indebtedness has been accelerated and such acceleration has not been waived or such Senior Indebtedness has not been paid in full; provided, however, that (x) in the event that the holder of any Senior Indebtedness accelerates such Senior Indebtedness, then the Holder may accelerate the indebtedness evidenced by this Note, and (y) if the Company is permitted under the terms of the Senior Indebtedness to pay an amount due and owing under this Note and fails to make such payment, then so long as the terms of the Senior Indebtedness do not prohibit such action, the Holder may exercise its rights to be paid such amount, but only such amount (and Holder shall not be permitted to accelerate hereunder). 
  
 (b) Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money, before any payment is made under Junior Indebtedness; and upon any such dissolution or winding up or liquidation or reorganization, any distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holder as holder of the Junior Indebtedness would be entitled except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holder if received by Holder, directly to the holder of the Senior Indebtedness, or its representatives, to the extent necessary to pay all such Senior Indebtedness in full, in money, after giving effect to any concurrent prepayment or distribution to or for the benefit of the holders of such Senior Indebtedness, before any payment or distribution is made to the Holder with respect to the Junior Indebtedness. 
   	 
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 (c) If the holders of the Senior Indebtedness in good faith believe Holder may fail to timely file a proof of claim in any such proceeding, the holder(s) of the Senior Indebtedness may do so for Holder. 
  
 (d) In the event that any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing where the holder has actual knowledge of a Senior Indebtedness payment default shall be received by the Holder before all the Senior Indebtedness is paid in full, or provisions made for such payment, in accordance with its terms, such payment or distribution shall be held for the benefit of, and shall be paid over or delivered to, the holders of the Senior Indebtedness or their representative or representatives, as their respective interests may appear, for application to the payment of all the Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full, in money, in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. 
  
 (e) The provisions hereof are solely for the purpose of defining the relative rights of the holders of the Senior Indebtedness on the one hand and the Holder as holder of the Junior Indebtedness on the other hand, and nothing herein shall impair, as between the Company and the Holder, the obligations of the Company under the Junior Indebtedness, which are unconditional and absolute. With this in mind, notwithstanding the other provisions of this Section 6, if and so long as all documents governing the Senior Indebtedness permit one of the actions restricted by this Section 6, the restriction shall be waived and the restricted action permitted hereunder. 
  
 (f) No right of any present or future holder of any Senior Indebtedness to enforce the subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any act or failure to act, in good faith, by any such holder of the Senior Indebtedness, or any noncompliance by the Company with the terms, provisions and covenants hereof, regardless of any knowledge thereof any holder of the Senior Indebtedness may have or be otherwise charged with. Without in any way limiting the generality of the foregoing, the holders of the Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Holder, without incurring responsibility to the Holder and without impairing or releasing the subordination provided in this Note or the obligations hereunder of the Holder to the holders of the Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or create, renew or alter, the Senior Indebtedness, or otherwise amend or supplement in any manner the Senior Indebtedness or any instrument evidencing the same or any agreement under which the Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing the Senior Indebtedness; (iii) release any person liable or contingently liable in any manner for the payment or collection of the Senior Indebtedness; and/or (iv) exercise or refrain from exercising any rights against the Company or any other person.
   	 
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 (g) Each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of this Note, shall be entitled to rely on the subordination provisions set forth in this Note.
  
 (h) Notwithstanding the provisions of this Section 6, the Holder shall not be charged with knowledge of the existence of facts which would prohibit the making of any payments on the Junior Indebtedness unless and until the holder(s) of the Senior Indebtedness or their representatives send written notice to Holder of same.
  
 (i) Subject to the payment in full of all the Senior Indebtedness, Holder as holder of the Junior Indebtedness shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until the Senior Indebtedness shall be paid in full.
  
 (j) The Holder shall confirm (in writing) the above subordination provisions if requested by any holder of the Senior Indebtedness, and shall execute and deliver such additional subordination agreements, consistent with the foregoing as any holder of Senior Indebtedness may require.
  
 (k) For purposes hereof, “Senior Indebtedness” means, with respect to the Company, all indebtedness of the Company, whether outstanding on the date of the execution of this Note or thereafter created, to Burnley Capital and SBCC or one or more of their respective affiliates; provided, however, that any term loan included in the definition of Senior Indebtedness shall not exceed $1,500,000 and the $1,500,000 cap on any such term loan shall be decreased by any amounts repaid to the term loan lender under the Company’s term loan with such lender.
  
 7. Mutilated, Destroyed, Lost or Stolen Note. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, the Holder shall surrender such Note to the Company. In the case of any destroyed, lost or stolen Note, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless. 
  
 8. Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.
   	 
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 9. Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal. 
  
 10. Assignment. The rights and obligations of the Company and the Holder of this Note shall be binding upon, and inure to the benefit of, the successors and permitted assigns of the parties hereto. To complete an assignment or transfer this Note, the Holder shall deliver a completed and executed Form of Assignment attached hereto as Exhibit B and surrender and deliver this Note, duly endorsed, to the Company’s office or such other address which the Company shall designate, upon receipt of which a new Note, in substantially the form of this Note (any such new Note, a “New Note”), evidencing the portion of this Note so transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Note by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Note that the Holder has in respect of this Note. Interest and principal are payable only to the registered Holder of this Note set forth on the books and records of the Company. 
  
 11. Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.
  
 12. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if given in accordance with the provisions of the Purchase Agreement. 
  
 13. Governing Law and Arbitration. This Note shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Missouri. Any dispute shall be resolved by arbitration conducted in St. Louis Missouri, in accordance with Chapter 435 of the Missouri Revised Statutes. The provisions of this Section 13 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.
  
 14. Headings. The descriptive headings contained in this Note are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Note.
  
 15. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.
  
 [Signature Page Follows]
   	 
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 IN WITNESS WHEREOF, the undersigned have caused this Note to be issued as of the date first above written.
  
  	 	1847 GOEDEKER INC.	
	 	   	  	 
		By:	/s/ Robert D. Barry 	
	  
	 Name:
	Robert D. Barry	 
	 	Title:	Chief Financial Officer	 

   
  	  

	8
	 
 
	 

  
 EXHIBIT A
  
 Amortization Schedule
  
 Quarterly payments begin on July 1, 2019 and shall be made on each July 1, October 1 and January 1 and April 1 thereafter. 
  
 	 Quarter
	  
	  
	 Payment
	  
	  
	 Principal Paid
	  
	  
	 Interest Paid
	  
	  
	 Remaining Balance
	  

	 1.
	  
	  
	$	256,832.49	  
	  
	$	164,582.49	  
	  
	$	92,250.00	  
	  
	$	3,935,417.51	  

	 2.
	  
	  
	$	256,832.49	  
	  
	$	168,285.60	  
	  
	$	88,546.89	  
	  
	$	3,767,131.91	  

	 3.
	  
	  
	$	256,832.49	  
	  
	$	172,072.02	  
	  
	$	84,760.47	  
	  
	$	3,595,059.89	  

	 4.
	  
	  
	$	256,832.49	  
	  
	$	175,943.64	  
	  
	$	80,888.85	  
	  
	$	3,419,116.25	  

	 5.
	  
	  
	$	256,832.49	  
	  
	$	179,902.37	  
	  
	$	76,930.12	  
	  
	$	3,239,213.88	  

	 6.
	  
	  
	$	256,832.49	  
	  
	$	183,950.18	  
	  
	$	72,882.31	  
	  
	$	3,055,263.70	  

	 7.
	  
	  
	$	256,832.49	  
	  
	$	188,089.06	  
	  
	$	68,743.43	  
	  
	$	2,867,174.64	  

	 8.
	  
	  
	$	256,832.49	  
	  
	$	192,321.06	  
	  
	$	64,511.43	  
	  
	$	2,674,853.58	  

	 9.
	  
	  
	$	256,832.49	  
	  
	$	196,648.28	  
	  
	$	60,184.21	  
	  
	$	2,478,205.30	  

	 10.
	  
	  
	$	256,832.49	  
	  
	$	201,072.87	  
	  
	$	55,759.62	  
	  
	$	2,277,132.43	  

	 11.
	  
	  
	$	256,832.49	  
	  
	$	205,597.01	  
	  
	$	51,235.48	  
	  
	$	2,071,535.42	  

	 12.
	  
	  
	$	256,832.49	  
	  
	$	210,222.94	  
	  
	$	46,609.55	  
	  
	$	1,861,312.48	  

	 13.
	  
	  
	$	256,832.49	  
	  
	$	214,952.96	  
	  
	$	41,879.53	  
	  
	$	1,646,359.52	  

	 14.
	  
	  
	$	256,832.49	  
	  
	$	219,789.40	  
	  
	$	37,043.09	  
	  
	$	1,426,570.12	  

	 15.
	  
	  
	$	256,832.49	  
	  
	$	224,734.66	  
	  
	$	32,097.83	  
	  
	$	1,201,835.46	  

	 16.
	  
	  
	$	256,832.49	  
	  
	$	229,791.19	  
	  
	$	27,041.30	  
	  
	$	972,044.27	  

	 17.
	  
	  
	$	256,832.49	  
	  
	$	234,961.49	  
	  
	$	21,871.00	  
	  
	$	737,082.78	  

	 18.
	  
	  
	$	256,832.49	  
	  
	$	240,248.13	  
	  
	$	16,584.36	  
	  
	$	496,834.65	  

	 19.
	  
	  
	$	256,832.49	  
	  
	$	245,653.71	  
	  
	$	11,178.78	  
	  
	$	251,180.94	  

	 20.
	  
	  
	$	256,832.51	  
	  
	$	251,180.94	  
	  
	$	5,651.57	  
	  
	$	0	  

	 Totals
	  
	  
	$	5,136,649.82	  
	  
	$	4,100,000.00	  
	  
	$	1,036,649.82	  
	  
	  
	  
	  

   	 
	9
	 
 
	 

  
 EXHIBIT B
  
 Form of Assignment
  
 TO: 1847 Goedeker Inc.,
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________ (name), __________________________________________ (address), US$____________ of 9% Subordinated Promissory Note (“Note”) of 1847 Goedeker Inc. (the “Company”), including any and all accrued and unpaid interest owing thereon, registered in the name of the undersigned on the records of the Company represented by the within certificate, and irrevocably appoints ___________________ the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.
  
 DATED this ________ day of, __________________, 20 ____.
  
  
 	  
	  

	 (Signature of Registered Note Holder)
	  

	     
	  

	   
	  

	 (Print name of Registered Note Holder)
	  

  
 Instructions:
  
  	1.	Signature of Holder must be the signature of the person appearing on the face of the Note.
	  
	   

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

  
  
  	10

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