Document:

Exhibit 10.4

 

MANAGEMENT SERVICES AGREEMENT

 

BY AND BETWEEN

 

1847 CABINET INC.

 

AND

 

1847 PARTNERS LLC

 

Dated as of August 21, 2020

 

     

     

    

 

MANAGEMENT SERVICES AGREEMENT

 

MANAGEMENT SERVICES
AGREEMENT (as amended, revised, supplemented or otherwise modified from time to time, this “Agreement”),
dated as of August 21, 2020, by and between 1847 CABINET INC., a Delaware corporation (the “Company”),
and 1847 PARTNERS LLC, a Delaware limited liability company (the “Manager”). Each party hereto shall
be referred to as, individually, a “Party” and, collectively, the “Parties.”

 

BACKGROUND

 

The Board of Directors
of the Company has determined that it would be in the best interests of the Company to appoint the Manager to perform the Services
(as such term is defined herein) and, therefore, the Company has agreed to appoint the Manager to perform the Services on the terms
and subject to the conditions set forth herein. The Manager has agreed to act as Manager and to perform the Services on the terms
and subject to the conditions set forth herein.

 

The Manager also acts
as an external manager for 1847 Holdings LLC (the “Parent”), the Company’s parent entity, pursuant
to the Management Services Agreement by and between the Manager and the Parent, dated as of April 15, 2013, as amended (the “Parent
MSA”). This Agreement is an Offsetting Management Services Agreement as defined and referenced in the Parent MSA.

 

AGREEMENT

 

NOW, THEREFORE,
in consideration of the mutual covenants, representations, warranties and agreements contained herein, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby,
the Parties hereto agree as follows:

 

ARTICLE
I

 

DEFINITIONS

 

For all purposes of
this Agreement, except as otherwise expressly provided or unless the context otherwise requires: the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as well as the singular; any reference to an “Article,”
“Section” or an “Exhibit” refers to an Article, Section or an Exhibit, as the case may be, of this Agreement;
and the words “herein,” “hereinafter,” “hereof,” “hereto” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision:

 

“Affiliate”
means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control
with such Person or (ii) any officer, director, general member, member or trustee of such Person. For purposes of this
definition, the terms “controlling,” “controlled by” or “under common control with” shall
mean, with respect to any Persons, the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, or the
power to elect at least 50% of the directors, managers, general members, or Persons exercising similar authority with respect
to such Person.

 

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“Agreement”
has the meaning set forth in the preamble of this Agreement.

 

“Board
of Directors” means the Board of Directors of the Company or any committee thereof that has been duly authorized
by the Board of Directors to make a decision on the matter in question or bind the Company as to the matter in question.

 

“Business
Day” means any day other than a Saturday, a Sunday or a day on which banks in the City of New York are required,
permitted or authorized, by applicable law or executive order, to be closed for regular banking business.

 

“Commencement
Date” means the date of this Agreement.

 

“Company”
has the meaning set forth in the preamble of this Agreement.

 

“Company
Information” means any information concerning the Company or any of the Subsidiaries of the Company and their respective
financial condition, business or operations that (i) relates to earnings, (ii) is competitively sensitive, (iii) relates to trade
secrets, (iv) is proprietary or (v) is similar to any of the foregoing information.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Federal
Securities Laws” means, collectively, the Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder.

 

“Fiscal
Quarter” means each fiscal quarter of the Company for purposes of the Parent’s reporting obligations under
the Exchange Act.

 

“Fiscal
Year” means each fiscal year of the Company for purposes of the Parent’s reporting obligations under the Exchange
Act.

 

“GAAP”
means generally accepted accounting principles in effect in the United States, consistently applied.

 

“Gross
Income” has the meaning set forth in Section 61(a) of the Internal Revenue Code of 1986, as amended.

 

“Incur”
means, with respect to any Indebtedness or other obligation of a Person, to create, issue, acquire (by conversion, exchange or
otherwise), assume, suffer, guarantee or otherwise become liable in respect of such Indebtedness or other obligation.

 

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“Indebtedness”
means, with respect to any Person, (i) any liability for borrowed money, or under any reimbursement obligation relating to a
letter of credit, (ii) all indebtedness (including bond, note, debenture, purchase money obligation or similar instrument)
for the acquisition of any businesses, properties or assets of any kind (other than property, including inventory, and
services purchased, trade payables, other expenses accruals and deferred compensation items arising in the Ordinary Course of
Business), (iii) all obligations under leases that have been or should be, in accordance with GAAP, recorded as capital
leases, (iv) any liabilities of others described in the preceding clauses (i) to (iii) (inclusive) that such Person has
guaranteed or for which such Person is otherwise legally obligated, and (without duplication) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) through (iv)
above.

 

“Indemnified
Parties” has the meaning set forth in Article IX hereof.

 

“Losses”
has the meaning set forth in Article IX hereof.

 

“Management
Fee” has the meaning set forth in Section 7.1(a) hereof.

 

“Management
Fee Payment Date” means the first Business Day of each Fiscal Quarter or, in the case of the Fiscal Quarter in which
this Agreement is terminated, the Termination Date.

 

“Manager”
has the meaning set forth in the preamble of this Agreement.

 

“Non-Critical
Services” means any Services other than the Services for which the Manager was engaged by the Company in light of
the experience and expertise of the employees of the Manager.

 

“Ordinary
Course of Business” means, with respect to any Person, an action taken by such Person if such action is (i) consistent
with the past practices of such Person and is taken in the normal day-to-day business or operations of such Person and (ii) which
is not required to be specifically authorized or approved by the board of directors of such Person.

 

“Parent”
has the meaning set forth in the recitals to this Agreement.

 

“Parent
Management Fee” has the meaning set forth in Section 7.1(a) hereof.

 

“Parent
MSA” has the meaning set forth in the recitals to this Agreement.

 

“Party”
and “Parties” have the meaning set forth in the preamble of this Agreement.

 

“Person”
means any individual, company (whether general or limited), limited liability company, corporation, trust, estate, association,
nominee or other entity.

 

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

 

“Services”
has the meaning set forth in Section 3.1(b) hereof.

 

“Subsidiary”
means, with respect to any Person, any corporation, company, joint venture, limited liability company, association or other entity
in which such Person owns, directly or indirectly, more than 50% of the outstanding voting equity securities or interests, the
holders of which are generally entitled to vote for the election of the board of directors or other governing body of such entity.

 

“Termination
Date” means the date upon which this Agreement is terminated pursuant Article VIII hereof.

 

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ARTICLE
II

 

APPOINTMENT OF THE MANAGER

 

Section 2.1Appointment

 

The Company hereby
agrees to, and hereby does, appoint the Manager to perform the Services as set forth in Section 3.1 herein and in accordance with
the terms and conditions of this Agreement.

 

Section 2.2Term

 

The Manager shall provide
Services to the Company from the Commencement Date until the termination of this Agreement in accordance with Article VIII hereof.

 

ARTICLE
III

 

OBLIGATIONS OF THE PARTIES

 

Section 3.1Obligations
of the Manager

 

(a) Subject
always to the oversight and supervision of the Board of Directors and the terms and conditions of this Agreement, the Manager shall
during the term of this Agreement perform the Services as set forth in Section 3.1(b) below and comply with the operational objectives
and business plans of the Company in existence from time to time. The Company shall promptly provide the Manager with all stated
operational objectives and business plans of the Company approved by the Board of Directors and any other available information
reasonably requested by the Manager.

 

(b) The
Manager agrees and covenants that it shall perform, or cause to be performed, the following services hereunder (as may be modified
from time to time pursuant to Section 3.3 hereof, the “Services”):

 

(i) conduct
general and administrative supervision and oversight of the Company’s day-to-day business and operations, including, but
not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative
policies and procedures, establishment and management of banking services, managing and arranging for the maintaining of liability
insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, acquisition of any additional licenses
and permits that become necessary, participation in risk management policies and procedures; and

 

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(ii) oversee and
consult with respect to the Company’s business and operational strategies, the implementation of such strategies and
the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and
expansion programs, acquisitions or dispositions and product or service lines.

 

(c) In
connection with the performance of the Services under this Agreement, the Manager shall have all necessary power and authority
to perform, or cause to be performed, such Services on behalf of the Company.

 

(d) In
connection with the performance of its obligations under this Agreement, the Manager is not permitted to engage in any activities
that would cause it to become an “investment adviser” as defined in Section 202(a)(11) of the Investment Advisers Act
of 1940, as amended, or any successor provision thereto.

 

(e) While
the Manager is providing the Services under this Agreement, the Manager shall also be permitted to provide services, including
services similar to the Services covered hereby, to other Persons, including Affiliates of the Manager. This Agreement and the
Manager's obligation to provide the Services under this Agreement shall not create an exclusive relationship between the Manager
and its Affiliates, on the one hand, and the Company and its Subsidiaries, on the other.

 

Section 3.2Obligations
of the Company

 

(a) The
Company shall, and the Company shall cause its Subsidiaries to, do all things reasonably necessary on their part as requested by
the Manager consistent with the terms of this Agreement to enable the Company to fulfill its obligations under this Agreement.

 

(b) The
Company shall, and the Company shall cause its Subsidiaries to, take reasonable steps to ensure that:

 

(i) the
officers and employees of the Company and its Subsidiaries, as the case may be, act in accordance with the terms of this Agreement
and the reasonable directions of the Manager in fulfilling the Manager’s obligations hereunder and allowing the Manager to
exercise its powers and rights hereunder; and

 

(ii)the Company
and its Subsidiaries provide to the Manager alt reports (including monthly management reports and all other relevant reports) that
the Manager may reasonably require and on such dates as the Manager may reasonably require.

 

Section 3.3Change of Services

 

(a) The
Company and the Manager shall have the right at any time during the term of this Agreement to change the Services provided by the
Manager and such changes shall in no way otherwise affect the rights or obligations of any Party hereunder.

 

(b) Any
change in the Services shall be authorized in writing and evidenced by an amendment to this Agreement, as provided in Section 12.9
hereof. Unless otherwise agreed in writing, the provisions of this Agreement shall apply to all changes in the Services.

 

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ARTICLE
IV

 

POWERS OF THE MANAGER

 

Section 4.1Powers of the
Manager

 

(a) The
Manager shall have no power to enter into any contract for or on behalf of the Company or otherwise subject it to any obligation,
such power to be the sole right and obligation of the Company, acting through its Board of Directors and/or the Company’s
officers.

 

(b) Subject
to Section 4.2 and for purposes other than to delegate its duties and powers to perform the Services hereunder, the Manager shall
have the power to engage any agents (including real estate agents and managing agents), valuers, contractors and advisors (including
operational, accounting, financial, tax and legal advisors) that it deems necessary or desirable in connection with the performance
of its obligations hereunder, which costs therefor shall be subject to reimbursement in accordance with Section 7.2 hereto.

 

Section 4.2Delegation

 

The Manager may delegate
or appoint:

 

(a) Any
of its Affiliates as its agent, at its own cost and expense, to perform any or all of the Services hereunder; or

 

(b) Any
Person, whether or not an Affiliate of the Manager, as its agent, at its own cost and expense, to perform those Services hereunder
which, in the sole discretion of the Manager, are Non-Critical Services; provided, however, that, in each case, the Manager
shall not be relieved of any of its obligations or duties owed to the Company hereunder as a result of such delegation. The Manager
shall be permitted to share Company Infom1ation with its appointed agents subject to appropriate, reasonable and customary confidentiality
arrangements. For the avoidance of doubt, any reference to Manager herein shall include its delegates or appointees pursuant to
this Section 4.2.

 

Section 4.3Manager’s
Obligations, Duties and Powers Exclusive

 

The Company agrees
that during the term of this Agreement, the obligations, duties and powers imposed on and granted to the Manager under Article
III and this Article IV are to be performed or held exclusively by the Manager, subject to Section 4.2 hereof, and the Company
shall not, either directly or indirectly, through its employees, Board of Directors or any other Person, as the case may be, perfo1m
any of the Services except in circumstances where it is necessary to do so to comply with applicable law or as otherwise agreed
by the Manager.

 

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ARTICLE
V

 

INSPECTION OF RECORDS

 

Section 5.1Books and Records
of the Company

 

At all reasonable times
and on reasonable notice, the Manager and any Person authorized by the Manager shall have access to, and the right to inspect,
for any reasonable purpose, during the term of this Agreement and for a period of five (5) years after termination hereof, the
books, records and data stored in computers and all documentation of the Company pertaining to all Services performed, or to be
performed, by the Manager or the Management Fee paid, or to be paid, by the Company to the Manager, in each case, hereunder. There
shall be no cost or expense charged by any Party to another Party pursuant to the exercise of any right under this Section 5.1.

 

Section 5.2Books and Records
of the Manager

 

At all reasonable times
and on reasonable notice, the Company and any Person authorized by the Company shall have access to, and the right to inspect the
books, records and data stored in computers and all documentation of the Manager pertaining to all Services performed, or to be
performed, by the Manager or the Management Fee paid, or to be paid, by the Company to the Manager, in each case, hereunder. There
shall be no cost or expense charged by any Party to another Party pursuant to the exercise of any right under this Section 5.2.

 

ARTICLE
VI

 

AUTHORITY OF THE COMPANY AND THE MANAGER

 

Each Party represents
and warrants to the other that it is duly authorized with full power and authority to execute, deliver and perform its obligations
and duties under this Agreement. The Company represents and warrants that the engagement of the Manager has been duly authorized
by the Board of Directors and is in accordance with all governing documents of the Company.

 

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ARTICLE
VII

 

MANAGEMENT FEE; EXPENSES

 

Section 7.1Management
Fee

 

(a) Subject to
the terms and conditions set forth in this Section 7.1, for the term of this Agreement, as payment to the Manager for
performing Services hereunder during any Fiscal Quarter or any part thereof, the Company shall pay a quarterly management fee
(the “Management Fee”) to the Manager on each Management Fee Payment Date equal to the greater of
$75,000 or 2% of Adjusted Net Assets (as defined in the Parent MSA) of the Company; provided, however, that (i) with
respect to the Fiscal Quarter in which the Commencement Date occurs, the Management Fee with respect to such Fiscal Quarter
or part thereof shall be equal to the product of (x) the Management Fee, multiplied by (y) a fraction, the
numerator of which is the number of days from and including the Commencement Date to and including the last day of such
Fiscal Quarter and the denominator of which is the number of days in such Fiscal Quarter, (ii) with respect to the Fiscal
Quarter in which this Agreement is terminated, the Management Fee with respect to such Fiscal Quarter or part thereof shall
be equal to the product of (x) the Management Fee, multiplied by (y) a fraction, the numerator of which is the
number of days from and including the first day of such Fiscal Quarter to but excluding the date upon which this Agreement is
terminated and the denominator of which is the number of days in such Fiscal Quarter, (iii) if the aggregate amount of
Management Fees paid or to be paid by the Company, together with all other management fees paid or to be paid by all other
Subsidiaries of the Parent to the Manager, in each case, with respect to any Fiscal Year exceeds, or is expected to exceed,
9.5% of the Parent’s Gross Income with respect to such Fiscal Year, then the Manager agrees that the Management Fee to
be paid by the Company for any remaining Fiscal Quarters in such Fiscal Year shall be reduced, on a pro rata basis
determined by reference to the management fees to be paid to the Manager by all of the Subsidiaries of the Parent, until the
aggregate amount of the Management Fee paid or to be paid by the Company, together with all other management fees paid or to
be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to such Fiscal Year, does not
exceed 9.5% of the Parent’s Gross Income with respect to such Fiscal Year, and (iv) if the aggregate amount the
Management Fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other
Subsidiaries of the Parent to the Manager, in each case, with respect to any Fiscal Quarter exceeds, or is expected to
exceed, the aggregate amount of the management fee (before any adjustment thereto) calculated and payable under the Parent
MSA (the “Parent Management Fee”) with respect to such Fiscal Quarter, then the Manager agrees that
the Management Fee to be paid by the Company for such Fiscal Quarter shall be reduced, on a pro rata basis, until the
aggregate amount of the Management Fee paid or to be paid by the Company, together with all other management fees paid or to
be paid by all other Subsidiaries of the Parent to the Manager, in each case, with respect to such Fiscal Quarter, does not
exceed the Parent Management Fee calculated and payable with respect to such Fiscal Quarter. The Management Fee shall be paid
in U.S. dollars by wire transfer in immediately available funds to an account or accounts designated by the Manager from time
to time.

 

(b) If
the Company does not have sufficient liquid assets to timely pay the entire amount of the Management Fee due on any Management
Fee Payment Date, the Company shall liquidate assets or Incur Indebtedness in order to pay such Management Fee in full on such
Management Fee Payment Date; provided, however, that if the Management Fee due on any Management Fee Payment Date cannot
be paid by the Company as the result of subordination provisions or other restrictions contained in financing or other agreements
between the Company and its senior lenders or the senior lenders of any of its affiliates, then the Management Fee shall accrue
and be paid as soon as the Company is able to pay the Management Fee without violation such subordination provision or other restrictions.

 

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Section 7.2Reimbursement
of Expenses

 

(a) Subject
to Section 7.2(b), the Company shall reimburse the Manager for all costs and expenses of the Company, including all out-of-pocket
costs and expenses, that are actually Incurred by the Manager or its Affiliates on behalf of the Company in connection with performing
Services hereunder, and all costs and expenses the reimbursement of which is specifically approved by the Board of Directors.

 

(b)
Notwithstanding the foregoing or anything else to the contrary herein, neither the Company nor any Subsidiary of the Company
shall be obligated or responsible for reimbursing or otherwise paying for any costs or expenses relating to the Manager's
overhead or to the Manager’s conduct or maintenance of its business and operations as a provider of management
services.

 

(c) Any
such reimbursement shall be made upon demand by the Manager in U.S. dollars by wire transfer in immediately available funds to
an account or accounts designated by the Manager from time to time.

 

ARTICLE
VIII

 

TERMINATION; RESIGNATION AND REMOVAL
OF THE MANAGER

 

Section 8.1Resignation
by the Manager

 

The Manager may resign
at any time upon sixty (60) days’ prior written notice to the Company, which right shall not be contingent upon the finding
of a replacement manager. However, if the Manager resigns, until the date on which the resignation becomes effective, the Manager
shall, upon request of the Board of Directors, use reasonable efforts to assist the Board of Directors to find a replacement manager
at no cost and expense to the Company.

 

Section 8.2Removal of
the Manager

 

The Manager may be
removed by the Company at any time upon sixty (60) days’ prior written notice to the Manager, which right shall not be contingent
upon the finding of a replacement manager.

 

Section 8.3Termination

 

Subject to Section
12.4, this Agreement shall terminate upon the effective date of the resignation or removal of the Manager in accordance with Section
8.1 or Section 8.2 hereof.

 

Section 8.4Directions

 

After a written notice
of termination has been given under this Article VIII, the Company may direct the Manager to undertake any actions necessary to
transfer any aspect of the ownership or control of the assets of the Company to the Company or to any nominee of the Company and
to do all other things necessary to bring the appointment of the Manager to an end, and the Manager shall comply with all such
reasonable directions. 1n addition, the Manager shall, at the Company’s expense, deliver to any new manager or the Company
any books or records held by the Manager under this Agreement and shall execute and deliver such instruments and do such things
as may reasonably be required to permit new management of the Company to effectively assume its responsibilities.

 

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Section 8.5Payments Upon
Termination

 

Notwithstanding anything
in this Agreement to the contrary, the fees, costs and expenses payable to the Manager pursuant to Article VII hereof shall be
payable to the Manager upon, and with respect to, the termination of this Agreement pursuant to this Article VIII. All payments
made pursuant to this Section 8.5 shall be made in accordance with Article VII hereof.

 

ARTICLE
IX

 

INDEMNITY

 

The Company shall indemnify,
reimburse, defend and hold harmless the Manager and its Affiliates and their respective successors and permitted assigns, together
with their respective employees, officers, members, managers, directors, agents and representatives (collectively the “Indemnified
Parties”), from and against all losses (including lost profits), costs, damages, injuries, taxes, penalties, interests,
expenses, obligations, claims and liabilities joint or severable) of any kind or nature whatsoever (collectively “Losses”)
that are Incurred by such Indemnified Parties in connection with, relating to or arising out of (i) the breach of any term or condition
of this Agreement, or (ii) the performance of any Services hereunder; provided, however, that the Company shall not be obligated
to indemnify, reimburse, defend or hold harmless any Indemnified Party for any Losses Incurred, by such Indemnified Party in connection
with, relating to or arising out of:

 

(a) a
breach by such Indemnified Party of this Agreement;

 

(b) the
gross negligence, willful misconduct, bad faith or reckless disregard of such Indemnified Party in the performance of any Services
hereunder; or

 

(c) fraudulent
or dishonest acts of such Indemnified Party with respect to the Company or any of its Subsidiaries.

 

The rights of any Indemnified
Party referred to above shall be in addition to any rights that such Indemnified Party shall otherwise have at law or in equity.

 

Without the prior written
consent of the Company, no Indemnified Party shall settle, compromise or consent to the entry of any judgment in, or otherwise
seek to terminate any, claim, action, proceeding or investigation in respect of which indemnification could be sought hereunder
unless (a) such Indemnified Party indemnifies the Company from any liabilities arising out of such claim, action, proceeding or
investigation, (b) such settlement, compromise or consent includes an unconditional release of the Company and Indemnified Party
from all liability arising out of such claim, action, proceeding or investigation and (c) the parties involved agree that the terms
of such settlement, compromise or consent shall remain confidential.

 

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ARTICLE
X

 

LIMITATION OF LIABILITY OF THE MANAGER

 

Section 10.1Limitation
of Liability

 

The Manager shall not
be liable for, and the Company shall not take, or permit to be taken, any action against the Manager to hold the Manager liable
for, any error of judgment or mistake of law or for any loss suffered by the Company or its Subsidiaries (including, without limitation,
by reason of the purchase, sale or retention of any security or assets) in connection with the performance of the Manager’s
duties under this Agreement, except for a loss resulting from gross negligence, willful misconduct, bad faith or reckless disregard
on the part of the Manager in the performance of its duties and obligations under this Agreement, or its fraudulent or dishonest
acts with respect to the Company or any of its Subsidiaries.

 

Section 10.2Reliance of
Manager

 

The Manager may take
and may act and rely upon:

 

(a) the
opinion or advice of legal counsel, which may be in-house counsel to the Company or the Manager, any U.S.-based law firm, or other
legal counsel reasonably acceptable to the Board of Directors, in relation to the interpretation of this Agreement or any other
document (whether statutory or otherwise) or generally in connection with the Company;

 

(b) advice,
opinions, statements or information from bankers, accountants, auditors,

 

(c) valuation
consultants and other Persons consulted by the Manager who are in each case believed by the Manager in good faith to be expert
in relation to the matters upon which they are consulted; and

 

(d) any
other document provided to the Manager in connection with the Company upon which it is reasonable for the Manager to rely.

 

The Manager shall not
be liable for anything done, suffered or omitted by it in good faith in reliance upon such opinion, advice, statement, information
or document.

 

ARTICLE
XI

 

LEGAL ACTIONS

 

The Manager shall notify
the Company promptly of any claim made by any third party in relation to the assets of the Company ai1d shall send to the Company
any notice, claim, summons or writ served on the Manager concerning the Company.

 

The Manager shall not,
without the prior written consent of the Board of Directors, purport to accept or admit any claims or liabilities of which it receives
notification on behalf of the Company or make any settlement or compromise with any third party in respect of the Company.

 

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ARTICLE
XII

 

MISCELLANEOUS

 

Section 12.1Obligation
of Good Faith; No Fiduciary Duties

 

The Manager shall perform
its duties under this Agreement in good faith and for the benefit of the Company. The relationship of the Manager to the Company
is as an independent contractor and nothing in this Agreement shall be construed to impose on the Manager any express or implied
fiduciary duties.

 

Section 12.2Binding Effect

 

This Agreement shall
be binding upon, shall inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted
assigns.

 

Section 12.3Compliance

 

(a) The
Manager shall (and must ensure that each of its officers, agents and employees) comply with any law, including the Federal Securities
Laws and the securities laws of any applicable jurisdiction, in each case, as in effect from time to time, to the extent that it
concerns the functions of the Manager under this Agreement.

 

(b) The
Manager shall maintain management systems, policies and internal controls and procedures that reasonably ensure that the Manager
and its employees comply with the terms and conditions of this Agreement, as well as comply with the internal policies, controls
and procedures established by the Company from time to time, including, without limitation, those relating to trading policies,
conflicts of interest and similar corporate governance measures.

 

Section 12.4Effect of
Termination; Survival

 

This Agreement shall
be effective as of the date first above written and shall continue in full force and effect thereafter until termination hereof
in accordance with Article VIII. The obligations of the Company set forth in Articles VII, VIII and IX and Sections 10.1, 12.5,
12.7, 12.8, 12.9, 12.17 and 12.20 hereof shall survive such termination of this Agreement, subject to applicable law.

 

Section 12.5Notices

 

Any notice or other
communication required or permitted under this Agreement shall be deemed to have been duly given (a) five (5) Business Days following
deposit in the mails if sent by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile transmission,
if receipt thereof is confirmed by telephone, (c) when delivered, if delivered personally to the intended recipient and (d) two
Business Days following deposit with a nationally recognized overnight courier service, in each case addressed as follows:

 

If to the Company,
to:

 

2950 E. Lucca Dr.

Meridian, ID 83642

Attn: Kenneth Yuan

Facsimile:

 

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If to the Manager,
to:

 

c/o The 1847 Companies
LLC

590 Madison Avenue,
21st Floor

New York, NY 10022

Attn: Ellery W. Roberts

Facsimile: 917-793-5950

 

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

 

Bevilacqua PLLC

1050 Connecticut Ave.,
Suite 500

Washington, DC 20036

Attn: Louis A. Bevilacqua

Email: lou@bevilacquapllc.com

Facsimile: 202-869-0889

 

or to such other address
or facsimile number as any such Party may, from time to time, designate in writing to all other Parties hereto, and any such communication
shall be deemed to be given, made or served as of the date so delivered or, in the case of any communication delivered by mail,
as of the date so received.

 

Section 12.6Headings

 

The headings in this
Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.

 

Section 12.7Applicable
Law

 

This Agreement, the
legal relations between and among the Parties and the adjudication and the enforcement thereof shall be governed by and interpreted
and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions thereof to
the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

 

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Section 12.8Submission
to Jurisdiction; Waiver of Jury Trial

 

Subject to
Section 12.20 hereof, each of the Parties hereby irrevocably acknowledges and agrees that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this Agreement shall be brought only in the
courts of the State of New York, County of New York or in the United States District Court for the Southern District of New
York and each of the Parties hereby irrevocably submits to and accepts with regard to any such action or proceeding, for
itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
Each Party hereby further irrevocably waives any claim that any such courts lack jurisdiction over such Party, and agrees not
to plead or claim, in any legal action or proceeding with respect to this Agreement or the transactions contemplated hereby
brought in any of the aforesaid courts, that any such court lacks jurisdiction over such Party. Each Party irrevocably
consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party, at its address for notices set forth in Section
12.5 hereof, such service to become effective ten (10) days after such mailing. Each Party hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder or under any other documents contemplated hereby that service of process was in any way
invalid or ineffective. The foregoing shall not limit the rights of any Party to serve process in any other manner permitted
by applicable law. The foregoing consents to jurisdiction shall not constitute general consents to service of process in the
State of New York for any purpose except as provided above and shall not be deemed to confer rights on any Person other than
the respective Parties.

 

Each of the Parties
hereby waives any right it may have under the laws of any jurisdiction to commence by publication any legal action or proceeding
with respect this Agreement. To the fullest extent permitted by applicable law, each of the Parties hereby irrevocably waives the
objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement in any of the courts referred to in this Section 12.8 and hereby further irrevocably waives and agrees not to
plead or claim that any such court is not a convenient forum for any such suit, action or proceeding.

 

The Parties agree that
any judgment obtained by any Party or its successors or assigns in any action, suit or proceeding referred to above may, in the
discretion of such Party (or its successors or assigns), be enforced in any jurisdiction, to the extent permitted by applicable
law.

 

The Parties agree that
the remedy at law for any breach of this Agreement may be inadequate and that should any dispute arise concerning any matter hereunder,
this Agreement shall be enforceable in a court of equity by an injunction or a decree of specific performance. Such remedies shall,
however, be cumulative and nonexclusive, and shall be in addition to any other remedies which the Parties may have.

 

Each Party hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation as between
the Parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated
hereby or disputes relating hereto. Each Party (a) certifies that no representative, agent or attorney of any other Party has represented,
expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other Parties have been induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 12.8.

 

    14

     

    

 

Section 12.9Amendment;
Waivers

 

No term or
condition of this Agreement may be amended, modified or waived without the prior written consent of the Party against whom
such amendment, modification or waiver will be enforced.

 

Any waiver granted
hereunder shall be deemed a specific waiver relating only to the specific event giving rise to such waiver and not as a general
waiver of any term or condition hereof.

 

Section 12.10Remedies
to Prevailing Party

 

If any action at law
or equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

 

Section 12.11Severability

 

Each provision of this
Agreement is intended to be severable from the others so that if, any provision or term hereof is illegal, invalid or unenforceable
for any reason whatsoever, such illegality, invalidity or unenforceability shall not affect or impair the validity of the remaining
provisions and terms hereof; provided, however, that the provisions governing payment of the Management Fee described in
Article VII hereof are not severable.

 

Section 12.12Benefits
Only to Parties

 

Nothing expressed by
or mentioned in this Agreement is intended or shall be construed to give any Person, other than the Parties and their respective
successors or permitted assigns and the Indemnified Parties, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained, terms Agreement and all conditions and provisions hereof being intended to
be and being for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns, and for the
benefit of no other Person.

 

Section 12.13Further Assurances

 

Each Party hereto shall
take any and all such actions, and execute and deliver such further agreements, consents, instruments and any other documents as
may be necessary from time to time to give effect to the provisions and purposes of this Agreement.

 

Section 12.14No Strict
Construction

 

The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by all Parties, and no presumption or burden of proof shall arise favoring
or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

    15

     

    

 

Section 12.15Entire Agreement

 

This Agreement
constitutes the sole and entire agreement of the Parties with regards to the subject matter of this Agreement. Any written or
oral agreements, statements, promises, negotiations or representations not expressly set fo1ih in this Agreement are of no
force and effect.

 

Section 12.16Assignment

 

This Agreement shall
not be assignable by either party except by the Manager to any Person with which the Manager may merge or consolidate or to which
the Manager transfers substantially all of its assets, and then only in the event that such assignee assumes all of the obligations
to the Company and the Subsidiaries of the Company hereunder.

 

Section 12.17Confidentiality

 

(a) The
Manager shall not, and the Manager shall cause its Affiliates and their respective agents and representatives not to, at any time
from and after the date of this Agreement, directly or indirectly, disclose or use any confidential or proprietary information,
including Company Information, involving or relating to (x) the Company, including any information contained in the books and records
of the Company and (y) the Subsidiaries of the Company, including any information contained in the books and records of any such
Subsidiaries; provided, however, that disclosure and use of any information shall be permitted (i) with the prior written
consent of the Company, (ii) as, and to the extent, expressly permitted by this Agreement or any other agreement between the Manager
and the Company or any of the Company’s Subsidiaries (but only to the extent that such information relates to such Subsidiaries),
(iii) as, and solely to the extent, necessary or required for the performance by the Manager, any of its Affiliates or its delegates,
of any of their respective obligations under this Agreement, (iv) as, and to the extent, necessary or required in the operation
of the Company's business or operations in the Ordinary Course of Business, (v) to the extent such information is generally available
to, or known by, the public or otherwise has entered the public domain (other than as a result of disclosure in violation of this
Section 12.17 by the Manager or any of its Affiliates), (vi) as, and to the extent, necessary or required by any governmental order,
applicable law or any governmental authority, subject to Section 12.17(d), and (vii) as, and to the extent, necessary or required
or reasonably appropriate in connection with the enforcement of any right or remedy relating to this Agreement or any other agreement
between the Manager and the Company or any of the Company’s Subsidiaries.

 

(b) The
Manager shall produce and implement policies and procedures that are reasonably designed to ensure compliance by the Manager’s
directors, officers, employees, agents and representatives with the requirements of this Section 12.17.

 

    16

     

    

 

(c) For
the avoidance of doubt, confidential information includes business plans, financial information, operational information, strategic
information, legal strategies or legal analysis, formulas, production processes, lists, names, research, marketing, sales information
and any other information similar to any of the foregoing or serving a purpose similar to any of the foregoing with respect to
the business or operations of the Company or any of its Subsidiaries. However, the Parties are not required to mark or otherwise
designate information as “confidential or proprietary information,” “confidential” or “proprietary”
in order to receive the benefits of this Section 12.17.

 

(d) In
the event that the Manager is required by governmental order, applicable law or any governmental authority to disclose any confidential
information of the Company or any of its Subsidiaries that is subject to the restrictions of this Section 12.17, the Manager shall
(i) notify the Company or any of its Subsidiaries in writing as soon as possible, unless it is otherwise affirmatively prohibited
by such governmental order, applicable law or such governmental authority from notifying the Company or any such Subsidiaries,
as the case may be, (ii) cooperate with the Company or any such Subsidiaries to preserve the confidentiality of such confidential
information consistent with the requirements of such governmental order, applicable law or such governmental authority and (iii)
use its reasonable best efforts to limit any such disclosure to the minimum disclosure necessary or required to comply with such
governmental order, applicable law or such governmental authority, in each case, at the cost and expense of the Company.

 

(e) Nothing
in this Section 12.17 shall prohibit the Manager from keeping or maintaining any copies of any records, documents or other information
that may contain information that is otherwise subject to the requirements of this Section 12.17, subject to its compliance with
this Section 12.17.

 

(f)The Manager
shall be responsible for any breach or violation of the requirements of this Section 12.17 by any of its agents or representatives.

 

Section 12.18Counterparts

 

This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.

 

Section 12.19Designation

 

This Agreement is an
“Offsetting Management Services Agreement” as such term is defined and used pursuant to the Parent MSA, and the Management
Fee is an “Offsetting Management Fee” as such term is defined and used pursuant to the Parent MSA.

 

Section 12.20Dispute Resolution

 

All disputes arising
out of this Agreement or relating to the performance of either Party of its obligations hereunder, which disputes the Parties are
unable to resolve directly between themselves, shall be settled by arbitration in New York, New York (unless the Company and the
Manager agree upon another location) before three arbitrators in accordance with the rules then in effect of the American Arbitration
Association.

 

*      *      *

 

    17

     

    

 

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

 

	 	1847 CABINET INC.

 

	 	By:	/s/ Kenneth Yuan:
	 	Name: 	Kenneth Yuan
	 	Title: 	Chief Executive Officer

 

	 	1847 PARTNERS LLC

 

	 	By:	/s/ Ellery W. Roberts
	 	Name: 	Ellery W. Roberts
	 	Title: 	Manager

 

[Signature Page to Management Services Agreement]Exhibit 10.5

 

SECURED PROMISSORY NOTE

 

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

 

1. Principal
and Interest.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

     

     

    

 

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

 

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

 

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

 

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

 

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

 

(c) Borrowing Procedures.

 

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

 

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

 

    -2-

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    -3-

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    -4-

     

    

 

3. Guaranty,
Security and Related Matters.

 

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

 

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

 

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

 

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

 

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

 

    -5-

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    -6-

     

    

 

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

 

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

 

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

 

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

 

    -7-

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    -8-

     

    

 

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

 

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

 

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

 

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

 

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

 

    -9-

     

    

 

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

 

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

 

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

 

[Signature Page Follows]

 

    -10-

     

    

  

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

 

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

  

    -11-

     

    

 

EXHIBIT A

 

EXISTING LIENS

 

None

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