arcee-ai/sec-data-full · Datasets at Hugging Face

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at a rate per annum equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time
to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase to 24% or the maximum
legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in
arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity
date, October 8, 2026. We may voluntarily prepay
the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and interest paid in connection
with such prepayment. In addition, immediately upon receipt by the Company or any subsidiary of any proceeds from any issuance of indebtedness
(other than certain permitted indebtedness), any proceeds of any sale or disposition by the Company or any subsidiary of any of the collateral
or any of its respective assets (other than asset sales or dispositions in the ordinary course of business which are permitted by the
note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar proceedings,
we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by the Company or a subsidiary in connection therewith (in each case, paid to non-affiliates). The holders of the notes
may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid
interest on such portion, into our common shares at a conversion price equal to $10.00 (subject to standard adjustments, including a
full ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant to the terms
of the notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the right, but
not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase agreement)
in an amount of up to the original principal amount of the notes. In addition, the holders shall have the right of first refusal to participate
in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal shall not apply
to permitted issuances. The note purchase agreement and the notes contain
customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this
type. The notes are guaranteed by each subsidiary and are secured by a first priority security interest in all of the assets of the Company
and its subsidiaries. 6% Subordinated
Convertible Promissory Notes A portion of the purchase
price for the acquisition of High Mountain and Innovative Cabinets on October 8,
2021 was paid by the issuance of 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345
by 1847 Cabinet to the sellers of High Mountain and Innovative Cabinets. The remaining principal balance of the notes at June 30, 2022
is $5,025,248, net of debt discount at $855,098, and they have accrued interest of $285,652. The notes bear interest
at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of default (as defined
in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes in whole or in part,
without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. At any time prior to
October 8, 2022, the holders may, in their sole discretion, elect to convert up to twenty percent (20%) of the original principal amount
of the notes and all accrued, but unpaid, interest into such number of shares of the common stock of 1847 Cabinet determined by dividing
the amount to be converted by a conversion price determined by dividing (i) the fair market value of 1847 Cabinet (determined in accordance
with the notes) by (ii) the number of shares of 1847 Cabinet outstanding on a fully diluted basis. In
addition, on October 8, 2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right
to exchange all of the principal amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common
shares to be determined by dividing the amount to be converted by an exchange price equal to the higher of (i) the 30-day volume
weighted average price for our common shares on the primary national securities exchange or over-the-counter market on which our
common shares are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00 (subject
to equitable adjustments for stock splits, stock combinations, recapitalizations and similar transactions). The notes contain customary
events of default, including in the event of a default under the secured convertible promissory notes described above. The rights of
the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible promissory
notes described above. 38 6% Amortizing Promissory Note On July 29, 2020, 1847 Asien entered into a securities
purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated
May 1, 1992 (the “Asien’s Seller”), pursuant to which the Asien’s Seller sold 103,750 of our common shares to
1847 Asien a purchase price of $10.00 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing
promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the Asien’s Seller entered
into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase agreement and the 6% amortizing
promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note were revised so that one-half (50%)
of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized on a two-year straight-line basis
and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment, except for the payments that
were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the senior convertible promissory
notes described above, and the second-half (50%) of the outstanding principal amount ($518,750) and all accrued, but unpaid interest
thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along with any other unpaid principal
or accrued interest thereon. The note is unsecured and contains customary events of default. The remaining principal balance of the note
at June 30, 2022 was $581,963 and it had accrued interest of $49,707. Vesting Promissory Note A portion of the purchase price for the acquisition
of Kyle’s on September 30, 2020 was paid by the issuance of a vesting promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and
Rita Mallatt in the principal amount of $1,050,000, which increased to a principal amount of up to $1,260,000 pursuant to the vested
percentage calculation described below. Payment of the principal and accrued interest on the note is subject to vesting as described
below. The note bears interest on the vested portion of principal amount at the rate of eight percent (8%) per annum. To the extent vested,
the vested portion of the principal and all accrued but unpaid interest on such vested portion of the principal shall be paid in one
lump sum on the last day of the thirty-sixth (36th) month following the date of the note. The vested principal of the note due at the maturity
date shall be calculated each year based on the average annual consolidated EBITDA (as defined in the note) of 1847 Cabinet for each
of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be divided by $1.4 million multiplied by 100 to obtain
the vested percentage. The vested principal for each year shall be equal to the vested percentage for that year multiplied by $350,000.
To the extent that the vested percentage for the subject year is less than 80%, no portion of the note for that year shall vest. To the
extent that the vested percentage for the subject year is equal to or greater than 120%, the vested principal shall be equal to $420,000
for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet was approximately $1,553,561, resulting in a
vested amount of approximately $388,390. For the year ended December 31, 2021, EBITDA of 1847 Cabinet was approximately $1,642,335, resulting
in an additional vested amount of approximately $410,584. As of June 30, 2022, the outstanding balance on this note was $1,001,183. 1847 Cabinet will have the right to redeem all
but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects to redeem the note, the redemption price
will be payable in cash and is equal to the then outstanding vested portion of the principal plus any remaining unvested principal amount
plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this redemption calculation, the “unvested
principal amount” shall be $350,000 per year. The note contains customary events of default.
The right of the holders to receive payments under the note is subordinated to all indebtedness of 1847 Cabinet, whether outstanding
as of the closing date or thereafter created, to banks, insurance companies and other financial institutions or funds, and federal or
state taxation authorities. Financing Leases On February 14, 2019, High Mountain entered in
an equipment financing lease to purchase a lift truck for $24,337, which matures on January 19, 2024. The balance payable was $8,520
as of June 30, 2022. On April 10, 2019, High Mountain entered in an
equipment financing lease to purchase equipment for $67,577, which matures on April 1, 2024. The balance payable was $27,473 as of June
30, 2022. On June 2, 2020, High Mountain entered in an
equipment financing lease to purchase office printers for $9,240, which matures on May 2, 2024. The balance payable was $4,611 as of
June 30, 2022. On May 6, 2021, Kyle’s entered in an equipment
financing lease to purchase equipment for $276,896, which matures on December 1, 2027. The balance payable was $248,899 as of June 30,
2022. On October 12, 2021, Kyle’s entered in
an equipment financing lease to purchase equipment for $245,375, which matures on December 1, 2027. The balance payable was $220,409
as of June 30, 2022. On March 28, 2022, Kyle’s entered in an
equipment financing lease to purchase equipment for $245,395, which matures on January 28, 2028. The balance payable was $230,514 as
of June 30, 2022. On March 28, 2022, Kyle’s entered in an
equipment financing lease to purchase equipment for $71,403, which matures on January 28, 2028. The balance payable was $66,939 as of
June 30, 2022. On April 11, 2022, Kyle’s entered in a
financing lease to lease copy machines valued at $11,706, which matures on June 20, 2027. The balance payable was $11,223 as of June
30, 2022. 39 Vehicle Loans Asien’s has entered into seven retail installment
sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate
remaining principal amount of $127,909 as of June 30, 2022. Kyle’s has entered into two retail installment
sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate
remaining principal amount of $57,717 as of June 30, 2022. High Mountain has entered into twelve retail
installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates ranging from 3.74% to 6.34%
with an aggregate remaining principal amount of $97,599 as of June 30, 2022. Innovative Cabinets has entered into two retail

at a rate per annum equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time

to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase to 24% or the maximum

legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in

arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity

date, October 8, 2026. We may voluntarily prepay

the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and interest paid in connection

with such prepayment. In addition, immediately upon receipt by the Company or any subsidiary of any proceeds from any issuance of indebtedness

(other than certain permitted indebtedness), any proceeds of any sale or disposition by the Company or any subsidiary of any of the collateral

or any of its respective assets (other than asset sales or dispositions in the ordinary course of business which are permitted by the

note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar proceedings,

we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary transaction costs, fees and expenses

properly attributable to such transaction and payable by the Company or a subsidiary in connection therewith (in each case, paid to non-affiliates). The holders of the notes

may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid

interest on such portion, into our common shares at a conversion price equal to $10.00 (subject to standard adjustments, including a

full ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant to the terms

of the notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the right, but

not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase agreement)

in an amount of up to the original principal amount of the notes. In addition, the holders shall have the right of first refusal to participate

in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal shall not apply

to permitted issuances. The note purchase agreement and the notes contain

customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this

type. The notes are guaranteed by each subsidiary and are secured by a first priority security interest in all of the assets of the Company

and its subsidiaries. 6% Subordinated

Convertible Promissory Notes A portion of the purchase

price for the acquisition of High Mountain and Innovative Cabinets on October 8,

2021 was paid by the issuance of 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345

by 1847 Cabinet to the sellers of High Mountain and Innovative Cabinets. The remaining principal balance of the notes at June 30, 2022

is $5,025,248, net of debt discount at $855,098, and they have accrued interest of $285,652. The notes bear interest

at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of default (as defined

in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes in whole or in part,

without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. At any time prior to

October 8, 2022, the holders may, in their sole discretion, elect to convert up to twenty percent (20%) of the original principal amount

of the notes and all accrued, but unpaid, interest into such number of shares of the common stock of 1847 Cabinet determined by dividing

the amount to be converted by a conversion price determined by dividing (i) the fair market value of 1847 Cabinet (determined in accordance

with the notes) by (ii) the number of shares of 1847 Cabinet outstanding on a fully diluted basis. In

addition, on October 8, 2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right

to exchange all of the principal amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common

shares to be determined by dividing the amount to be converted by an exchange price equal to the higher of (i) the 30-day volume

weighted average price for our common shares on the primary national securities exchange or over-the-counter market on which our

common shares are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00 (subject

to equitable adjustments for stock splits, stock combinations, recapitalizations and similar transactions). The notes contain customary

events of default, including in the event of a default under the secured convertible promissory notes described above. The rights of

the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible promissory

notes described above. 38 6% Amortizing Promissory Note On July 29, 2020, 1847 Asien entered into a securities

purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated

May 1, 1992 (the “Asien’s Seller”), pursuant to which the Asien’s Seller sold 103,750 of our common shares to

1847 Asien a purchase price of $10.00 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing

promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the Asien’s Seller entered

into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase agreement and the 6% amortizing

promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note were revised so that one-half (50%)

of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized on a two-year straight-line basis

and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment, except for the payments that

were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the senior convertible promissory

notes described above, and the second-half (50%) of the outstanding principal amount ($518,750) and all accrued, but unpaid interest

thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along with any other unpaid principal

or accrued interest thereon. The note is unsecured and contains customary events of default. The remaining principal balance of the note

at June 30, 2022 was $581,963 and it had accrued interest of $49,707. Vesting Promissory Note A portion of the purchase price for the acquisition

of Kyle’s on September 30, 2020 was paid by the issuance of a vesting promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and

Rita Mallatt in the principal amount of $1,050,000, which increased to a principal amount of up to $1,260,000 pursuant to the vested

percentage calculation described below. Payment of the principal and accrued interest on the note is subject to vesting as described

below. The note bears interest on the vested portion of principal amount at the rate of eight percent (8%) per annum. To the extent vested,

the vested portion of the principal and all accrued but unpaid interest on such vested portion of the principal shall be paid in one

lump sum on the last day of the thirty-sixth (36th) month following the date of the note. The vested principal of the note due at the maturity

date shall be calculated each year based on the average annual consolidated EBITDA (as defined in the note) of 1847 Cabinet for each

of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be divided by $1.4 million multiplied by 100 to obtain

the vested percentage. The vested principal for each year shall be equal to the vested percentage for that year multiplied by $350,000.

To the extent that the vested percentage for the subject year is less than 80%, no portion of the note for that year shall vest. To the

extent that the vested percentage for the subject year is equal to or greater than 120%, the vested principal shall be equal to $420,000

for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet was approximately $1,553,561, resulting in a

vested amount of approximately $388,390. For the year ended December 31, 2021, EBITDA of 1847 Cabinet was approximately $1,642,335, resulting

in an additional vested amount of approximately $410,584. As of June 30, 2022, the outstanding balance on this note was $1,001,183. 1847 Cabinet will have the right to redeem all

but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects to redeem the note, the redemption price

will be payable in cash and is equal to the then outstanding vested portion of the principal plus any remaining unvested principal amount

plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this redemption calculation, the “unvested

principal amount” shall be $350,000 per year. The note contains customary events of default.

The right of the holders to receive payments under the note is subordinated to all indebtedness of 1847 Cabinet, whether outstanding

as of the closing date or thereafter created, to banks, insurance companies and other financial institutions or funds, and federal or

state taxation authorities. Financing Leases On February 14, 2019, High Mountain entered in

an equipment financing lease to purchase a lift truck for $24,337, which matures on January 19, 2024. The balance payable was $8,520

as of June 30, 2022. On April 10, 2019, High Mountain entered in an

equipment financing lease to purchase equipment for $67,577, which matures on April 1, 2024. The balance payable was $27,473 as of June

30, 2022. On June 2, 2020, High Mountain entered in an

equipment financing lease to purchase office printers for $9,240, which matures on May 2, 2024. The balance payable was $4,611 as of

June 30, 2022. On May 6, 2021, Kyle’s entered in an equipment

financing lease to purchase equipment for $276,896, which matures on December 1, 2027. The balance payable was $248,899 as of June 30,

2022. On October 12, 2021, Kyle’s entered in

an equipment financing lease to purchase equipment for $245,375, which matures on December 1, 2027. The balance payable was $220,409

as of June 30, 2022. On March 28, 2022, Kyle’s entered in an

equipment financing lease to purchase equipment for $245,395, which matures on January 28, 2028. The balance payable was $230,514 as

of June 30, 2022. On March 28, 2022, Kyle’s entered in an

equipment financing lease to purchase equipment for $71,403, which matures on January 28, 2028. The balance payable was $66,939 as of

June 30, 2022. On April 11, 2022, Kyle’s entered in a

financing lease to lease copy machines valued at $11,706, which matures on June 20, 2027. The balance payable was $11,223 as of June

30, 2022. 39 Vehicle Loans Asien’s has entered into seven retail installment

sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate

remaining principal amount of $127,909 as of June 30, 2022. Kyle’s has entered into two retail installment

sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate

remaining principal amount of $57,717 as of June 30, 2022. High Mountain has entered into twelve retail

installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates ranging from 3.74% to 6.34%

with an aggregate remaining principal amount of $97,599 as of June 30, 2022. Innovative Cabinets has entered into two retail