1847 Holdings LLC (OTCMKTS:EFSH) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

Stock Purchase Agreement

On March 3, 2017, 1847 Neese, Inc. (1847 Neese), a subsidiary of
1847 Holdings LLC (the Company), entered into a Stock Purchase
Agreement (the Purchase Agreement) with Neese, Inc., an Iowa
corporation (Neese), and Alan Neese and Katherine Neese (the
Sellers), to which, on the same date, 1847 Neese acquired all of
the issued and outstanding capital stock of Neese for an
aggregate purchase price of (i) $2,225,000 in cash (subject to
adjustment as described below), (ii) 450 shares of the common
stock of 1847 Neese (the Shares), constituting 45% of the capital
stock of 1847 Neese, (iii) the issuance of a vesting promissory
note in the principal amount of $1,875,000, and (iv) the issuance
of a short term promissory note in the principal amount of
$1,025,000. Headquartered in Grand Junction, Iowa and founded in
1991, Neese is an established business specializing in providing
a wide range of land application services and selling equipment
and parts, primarily to the agricultural industry.

The cash portion of the purchase price is subject to a
post-closing working capital adjustment provision. Under this
provision, the cash portion of the purchase price will be
adjusted upward if the final certified balance sheet of Neese as
of a date on or about the closing date does not reflect a cash
balance of at least $200,000. In the event of such a deficiency,
the Sellers are required to pay 1847 Neese an amount in cash
equal to the deficiency.

The Purchase Agreement contains customary representations,
warranties and covenants, including a covenant that the Sellers
will not complete with the business of Neese for a period of
three (3) years following closing. In addition, 1847 Neese agreed
that for so long as the Sellers and/or their affiliates
beneficially own the Shares, 1847 Neese and Neese shall not do
any of the following without the written consent or affirmative
vote of the Sellers and/or such affiliates:(i) liquidate,
dissolve or wind-up their business and affairs; (ii) effect any
merger or consolidation; (iii) sell substantially all of their
assets; (iv) amend, alter or repeal any provision of their
articles of incorporation or bylaws; (v) create or issue shares
of any additional class or series of capital stock, or increase
the authorized number of shares of capital stock; (vi)
reclassify, alter or amend any existing security that is pari
passu with the Shares in respect of the distribution of
assets on the liquidation, dissolution or winding up, the payment
of dividends or rights of redemption, if such reclassification,
alteration or amendment would render such other security senior
to the Shares in respect of any such right, preference, or
privilege; (vii) purchase or redeem any shares of capital stock
other than repurchases of stock from former employees, officers,
directors, consultants or other persons who performed services;
(viii) incur any aggregate indebtedness in excess of $6 million,
other than trade credit incurred in the ordinary course of
business; (ix) issue any additional shares of common stock or
options, warrants, or other securities directly or indirectly
convertible into or exchangeable for common stock; or (x)
increase or decrease the authorized number of directors
constituting its board of directors.

The Purchase Agreement also contains mutual indemnification for
breaches of representations or warranties and failure to perform
covenants or obligations contained in the Purchase Agreement. In
the case of the indemnification provided by the Sellers with
respect to breaches of certain non-fundamental representations
and warranties, the Sellers will only become liable for
indemnified losses if the amount exceeds $50,000, whereupon they
will be liable for all losses relating back to the first dollar.
Furthermore, the liability of the Sellers for breaches of certain
non-fundamental representations and warranties shall not exceed
the cash portion of the purchase price payable under the Purchase
Agreement.

The closing of the Purchase Agreement was subject to customary
closing conditions, including, without limitation, the completion
of accounting and legal due diligence investigations; the receipt
of all authorizations, consents and approvals of all governmental
authorities or agencies; the receipt of any required consents of
any third parties; the release of any security interests; and
delivery of all documents required for the transfer of shares of
Neese to 1847 Neese.

Vesting Promissory Note

As noted above, a portion of the purchase price under the
Purchase Agreement was paid by the issuance of a vesting
promissory note in the principal amount of $1,875,000 by 1847
Neese and Neese to the Sellers (the Vesting Note). Payment of the
principal and accrued interest on the Vesting Note is subject to
vesting. The Vesting Note bears interest on the vested portion of
the principal amount at the rate of eight percent (8%) per annum
and is due and payable in full on June 30, 2020 (the Maturity
Date). The principal of the Vesting Note vests in accordance with
the following formula:

For purposes of the Vesting Note, Adjusted EBITDA means the
earnings before interest, taxes, depreciation and amortization
expenses, in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting
policies, practices and procedures used to prepare the financial
statements of Neese as of the closing date (GAAP), plus to the
extent deducted in calculating such net income, (i) all expenses
related to the transactions contemplated hereby and/or potential
or completed future financings or acquisitions, including legal,
accounting, due diligence and investment banking fees and
expenses, (ii) all management fees, allocations or corporate
overhead (including executive compensation) or other
administrative costs that arise from the ownership of Neese by
1847 Neese including allocations of supervisory, centralized or
other parent-level expense items, (iii) one-time extraordinary
expenses or losses, (iv) any reserves or adjustments to reserves
which are not consistent with GAAP. Additionally, for purposes of
calculating Adjusted EBITDA, the purchase and sales prices of
goods and services sold by or purchased by Neese to or from 1847
Neese, its subsidiaries or affiliates shall be adjusted to
reflect the amounts that Neese would have realized or paid if
dealing with an independent third party in an arms-length
commercial transaction, and inventory items shall be property
categorized as such and shall not be expenses until such
inventory is sold or consumed.

The Vesting Note contains customary events of default, including
in the event of (i) non-payment, (ii) a default by 1847 Neese or
Neese of any of their covenants under the Purchase Agreement, the
Vesting Note, or any other agreement entered into in connection
with the Purchase Agreement, or a breach of any of their
representations or warranties under such documents, or (iii) the
bankruptcy of 1847 Neese or Neese.

to the Vesting Note, 1847 Neese and Neese agreed until the
Maturity Date to act in good faith to continue to operate Neeses
business as conducted prior to the closing and, in connection
therewith, to (i) provide reasonably adequate funding of Neeses
growth and operations, (ii) use all reasonable commercial efforts
to exploit market opportunities, and generally use good faith
efforts to maximize Adjusted EBITDA, and (iii) not take, and
cause their affiliates to refrain from taking, any action the
purpose of which is to impede the ability of the Vesting Note to
fully vest. They also agreed that they would not sell all or
substantially all of the assets of Neese, sell more than 50% of
the voting securities of 1847 Neese or Neese, or merge or
consolidate Neese with or into another entity (each, a
Fundamental Change). In the event of a Fundamental Change, the
maximum aggregate principal amount of $1,875,000 plus interest
thereon shall be automatically accelerated and deemed vested and
become immediately due and payable. In addition, if Alan Neese or
Katherine Neese are terminated for any reason other than for
cause under their respective employment agreements with Neese,
then the maximum aggregate principal amount of $1,875,000 plus
interest thereon shall also be automatically accelerated and
deemed vested and become immediately due and payable.

Short Term Promissory Note

As noted above, a portion of the purchase price under the
Purchase Price was paid by the issuance of a short term
promissory note in the principal amount of $1,025,000 by 1847
Neese and Neese to the Sellers (the Short Term Note). The Short
Term Note bears interest on the outstanding principal amount at
the rate of ten percent (10%) per annum and is due and payable in
full on March 3, 2018; provided, however, that the unpaid
principal, and all accrued, but unpaid, interest thereon shall be
prepaid if at any time, and from time to time, the cash on hand
of 1847 Neese and Neese exceeds $250,000 and, then, the
prepayment shall be equal to the amount of cash in excess of
$200,000 until the unpaid principal and accrued, but unpaid,
interest thereon is fully prepaid. The Short Term Note contains
the same events of default as the Vesting Note.

Agreement of Lease

to the Purchase Agreement, on March 3, 2017, Neese entered into
an Agreement of Lease (the Lease) with KH Holdings, LLC, a
limited liability company that is wholly-owned by the Sellers.
The Lease is for a term of ten (10) years and provides for a base
rent of $8,333.33 per month. In the event of late payment,
interest shall accrue on the unpaid amount at the rate of
eighteen percent (18%) per annum. The Lease contains customary
events of default, including if Neese shall fail to pay rent
within five (5) days after the due date, or if Neese shall fail
to perform any other terms, covenants or conditions under the
Lease, and other customary representations, warranties and
covenants.

Master Lease Agreement

The cash portion of the purchase price was financed under a
capital lease transaction for Neeses equipment with Utica
Leaseco, LLC (the Lessor), to a Master Lease Agreement (the
Master Lease), dated March 3, 2017, between Utica, as lessor, and
1847 Neese and Neese, as co-lessees (collectively, the Lessee).
Under the Master Lease, the Lessor loaned an aggregate of
$3,240,000 for certain of Neeses equipment listed therein (the
Equipment), which it leases to the Lessee. The term of the Master
Lease is for 51 months.

The Lessee is required to pay a monthly rent of $53,000 for the
first three months, with such amount increasing to $85,321.63 for
the remaining 48 months. If any rent is not received by the
Lessor within five (5) calendar days of the due date, the Lessee
shall pay a late charge equal to ten (10%) percent of the amount.
In addition, in the event that any payment is not processed or is
returned on the basis of insufficient funds, upon demand, the
Lessee shall pay the Lessor a charge equal to five (5%) percent
of the amount of such payment. The Lessee is also required to pay
an annual administration fee of $3,000. Upon the expiration of
the term of the Master Lease, the Lessee is required to pay,
together with all other amounts then due and payable under the
Master Lease, in cash, an end of term buyout price equal to the
lesser of (a) $162,000 (five (5%) percent of the Total Invoice
Cost (as defined in the Master Lease)) or (b) the fair market
value of the Equipment, as determined by the Lessor.

Provided that no default under the Master Lease has occurred and
is continuing beyond any applicable grace or cure period, the
Lessee has an early buy-out option with respect to all but not
less than all of the Equipment, upon the payment of any
outstanding rental payments or other fees then due, plus an
additional amount set forth in the Master Lease, which represents
the anticipated fair market value of the Equipment as of the
anticipated end date of the Master Lease. In addition, the Lessee
shall pay to the Lessor an administrative charge to be determined
by the Lessor to cover its time and expenses incurred in
connection with the exercise of the option to purchase,
including, but not limited to, reasonable attorney fees and
costs. Furthermore, upon the exercise by the Lessee of this
option to purchase the Equipment, the Lessee shall pay all sales
and transfer taxes and all fees payable to any governmental
authority as a result of the transfer of title of the Equipment
to Lessee.

In connection with the Master Lease, the Lessee granted a
security interest on all of its right, title and interest in and
to (i) the Equipment, together with all related software
(embedded therein or otherwise) and general intangibles, all
additions, attachments, accessories and accessions thereto
whether or not furnished by the supplier; (ii) all accounts,
chattel paper, deposit accounts, documents, other equipment,
general intangibles, instruments, inventory, investment property,
letter of credit rights and any supporting obligations related to
any of the foregoing; (iii) all books and records pertaining to
the foregoing; (iv) all property of such Lessee held by the
Lessor, including all property of every description, in the
custody of or in transit to the Lessor for any purpose, including
safekeeping, collection or pledge, for the account of such Lessee
or as to which such Lessee may have any right or power, including
but not limited to cash and (v) to the extent not otherwise
included, all insurance, substitutions, replacements, exchanges,
accessions, proceeds and products of the foregoing.

A default shall be deemed to have occurred under the Master Lease
upon the occurrence of any of the following (each, an Event of
Default): (i) non-payment of rent within five (5) days of the
applicable rent payment date; (ii) non-payment of any other
payment within five (5) days after it is due; (iii) failure to
maintain, use or operate the Equipment in compliance with
applicable law; (iv) failure to remain in full compliance with
all applicable laws including, without limitation, (a) ensuring
that no person who owns a controlling interest in or otherwise
controls either Lessee is or shall be (1) listed on the Specially
Designated Nationals and Blocked Person List maintained by the
Office of Foreign Assets Control, Department of the Treasury,
and/or any other similar lists maintained by it to any
authorizing statute, Executive Order or regulation, or (2) a
person designated under Sections 1(b), (c) or (d) of Executive
Order No. 13224 (September 23, 2001), any related enabling
legislation or any other similar Executive Orders, and (b)
compliance with all applicable Bank Secrecy Act laws, regulations
and government guidance and on the prevention and detection of
money laundering violations; (v) failure to obtain, maintain and
comply with all of the insurance coverages required under the
Master Lease that is not cured within five (5) days after notice
thereof; (vi) any transfer or encumbrance, or the existence of
any lien, except for permitted liens; (vii) a payment or other
default by the Lessee under any loan, lease, guaranty or other
financial obligation to the Lessor or its affiliates which
default entitles the other party to such obligation to exercise
remedies; (viii) a payment or other default by the Lessee under
any material loan, lease, guaranty or other material financial
obligation to any third party which default has been declared;
(iv) an inaccuracy in any representation or breach of warranty by
the Lessee (including any false or misleading representation or
warranty) in any financial statement or Lease Document (as
defined in the Master Lease), including any omission of any
substantial contingent or unliquidated liability or claim against
the Lessees; (x) the commencement of any bankruptcy, insolvency,
receivership or similar proceeding by or against the Lessee or
any of its properties or business (unless, if involuntary, the
proceeding is dismissed within sixty (60) days of the filing
thereof) or the rejection of Master Lease or any other Lease
Document in any such proceeding; (xi) the failure by the Lessee
generally to pay its debts as they become due or their admission
in writing of their inability to pay the same; (xii) the Lessee
shall (a) enter into any transaction of merger or consolidation
(with certain exceptions stated in the Master Lease), (b) cease
to do business as a going concern, liquidate, or dissolve; or (c)
sell, transfer, or otherwise dispose of all or substantially all
of its assets or property; (xiii) if the Lessee is privately held
and effective control of the Lessee’s voting capital stock,
issued and outstanding from time to time, is not retained by the
present holders (unless the Lessee shall have provided thirty
(30) days prior written notice to the Lessor of the proposed
disposition and the Lessor shall have consented thereto in
writing); (xix) if the Lessee is a publicly held corporation and
there is a material change in the ownership of the Lessees
capital stock, unless the Lessor is satisfied as to the
creditworthiness of the Lessee and as to the Lessees conformance
to the other standard criteria then used by the Lessor for such
purpose immediately thereafter; (xx) there occurs a default or
anticipatory repudiation under any guaranty executed in
connection with the Master Lease; (xxi) failure to satisfy the
requirements of any financial covenants set forth in the Master
Lease, or in any rider or schedule to the Master Lease; (xxii)
failure to timely pay any material suppliers and mechanics for
work or repairs to the Equipment; or (xxiii) breach by the Lessee
of any other covenant, condition or agreement (other than those
in items (i)-(xxii)) under the Master Lease or any of the other
Lease Documents that continues for thirty (30) days after the
Lessors written notice to the Lessee (but such notice and cure
period will not be applicable unless such breach is curable by
practical means within such notice period).

If an Event of Default occurs, the Lessor may (in its sole
discretion) exercise any one or more of the following remedies:
(i) proceed at law or in equity, to enforce specifically the
Lessees performance or to recover damages; (ii) declare the
Lessee in default, and terminate the Lessees right to use the
Equipment and the Lessees other rights, but not its obligations,
under the Master Lease and the Lessee shall immediately assemble,
make available and, if the Lessor requests, return the Equipment
to the Lessor in accordance with the terms of the Master Lease;
(iii) enter any premises where any item of Equipment is located
and take immediate possession of and remove (or disable in place)
such item (and/or any unattached parts) by self-help, summary
proceedings or otherwise without liability; (iv) use the premises
where the Equipment is located to store, repair, assemble,
auction, sell or otherwise deal with the Equipment, without cost
or liability to Lessor; (v) sell, re-lease or otherwise dispose
of any or all of the Equipment, whether or not in the Lessors
possession, at public or private sale, with or without notice to
the Lessee, and apply or retain the net proceeds of such
disposition, with the Lessee remaining liable for any deficiency
and with any excess being for the account of the Lessee; (vi)
enforce any or all of the preceding remedies with respect to any
Equipment, and apply any deposit or other cash collateral, or any
proceeds of any such Equipment, at any time to reduce any amounts
due to the Lessor; (vii) demand and recover from the Lessee all
Liquidated Damages whenever the same shall be due; and (viii)
exercise any and all other remedies allowed by applicable law,
including the Uniform Commercial Code. Liquidated Damages means
an amount calculated as the Stipulated Loss Value of the
Equipment (determined as of the next rent payment date after the
date of the occurrence of the subject Event of Default), together
with all other rent due as of such determination date, and all
Enforcement Costs, less a credit for any disposition proceeds, if
applicable. Stipulated Loss Value means the product of the
portion of the total invoice cost allocated to the lost equipment
as determined by the Lessor in its sole discretion, times the
percentage factor applicable to the loss payment date, as set
forth in the Master Lease. Enforcement Costs include all
reasonable legal fees and other enforcement costs and expenses
incurred by reason of any Event of Default or the exercise of the
Lessors rights or remedies, including all expenses incurred in
connection with the return or other recovery of any Equipment, or
the sale, re-lease or other disposition, and sales or use taxes
incurred by the Lessor in connection with any disposition of the
Equipment after the occurrence of an Event of Default, and all
other pre-judgment and post-judgment enforcement related actions
taken by the Lessor or any actions taken by the Lessor in any
bankruptcy case involving the Lessee, the Equipment, or any other
person.

In addition, from and after the date on which an Event of Default
occurs, the Lessee shall pay interest to the Lessor with respect
to all amounts due under the Master Lease until such amounts are
received by the Lessor at a per annum interest rate that is the
lesser of eighteen percent (18%) or the maximum rate permitted by
applicable law.

During the term of the Master Lease, the Lessee agreed that it
would not (i) prepay any indebtedness owning to any person (other
than the Lessor) if such prepayment impairs the Lessees ability
to fulfill its obligations hereunder on a timely basis; (ii)
enter into any acquisition, merger, consolidation,
reorganization, or recapitalization, or reclassify its capital,
or liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business,
property, or assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or substantially all of the
properties, assets, or other evidence of beneficial ownership of
any person or entity, or commit to do any of the foregoing; (iii)
guarantee or otherwise become in any way liable with respect to
any obligation of any person or entity except by endorsement of
instruments or items of payment for deposit to the account of the
Lessee which are transmitted or turned over to the Lessor; or
(iv) take any action concerning or with respect to the Equipment
that is inconsistent with the provisions or purposes of the
Master Lease or that would otherwise impair or threaten to impair
the Lessors interest in the Equipment or the Lessors rights under
the Master Lease.

Management Services Agreement

On March 3, 2017 (the Commencement Date), 1847 Neese entered into
a Management Services Agreement (the Offsetting MSA) with the
Companys manager, 1847 Partners LLC (the Manager). The MSA is an
Offsetting Management Services Agreement as defined in that
certain Management Services Agreement, dated April 15, 2013,
between the Company and the Manager (the MSA).

to the Offsetting MSA, 1847 Neese appointed the Manager to
provide certain services to it for a quarterly management fee
equal to $62,500 per quarter; provided, however, that (i) pro
rated payments shall be made in the first quarter and the last
quarter of the term, (ii) if the aggregate amount of management
fees paid or to be paid by 1847 Neese, together with all other
management fees paid or to be paid by all other subsidiaries of
the Company to the Manager, in each case, with respect to any
fiscal year exceeds, or is expected to exceed, 9.5% of the
Companys gross income with respect to such fiscal year, then the
management fee to be paid by 1847 Neese 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 Company, until
the aggregate amount of the management fee paid or to be paid by
1847 Neese, together with all other management fees paid or to be
paid by all other subsidiaries of the Company to the Manager, in
each case, with respect to such fiscal year, does not exceed 9.5%
of the Companys gross income with respect to such fiscal year,
and (iv) if the aggregate amount the management fee paid or to be
paid by 1847 Neese, together with all other management fees paid
or to be paid by all other subsidiaries of the Company 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 MSA (the Parent Management Fee) with respect to
such fiscal quarter, then the management fee to be paid by 1847
Neese 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 1847 Neese, together with all other management fees
paid or to be paid by all other subsidiaries of the Company 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.

1847 Neese shall also reimburse the Manager for all costs and
expenses of 1847 Neese which are specifically approved by the
board of directors of 1847 Neese, including all out-of-pocket
costs and expenses, that are actually incurred by the Manager or
its affiliates on behalf of 1847 Neese in connection with
performing services under the Offsetting MSA.

The services provided by the Manager include: conducting general
and administrative supervision and oversight of 1847 Neeses
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 overseeing and consulting
with respect to 1847 Neeses 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.

The foregoing summary of the terms and conditions of the Purchase
Agreement, the Vesting Note, the Short Term Note, the Lease, the
Master Lease and the Offsetting MSA does not purport to be
complete and is qualified in its entirety by reference to the
full text of the agreements attached hereto as Exhibit 10.1-10.6,
which are incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of
Assets.

The information set forth under Item 1.01 is incorporated by
reference into this Item 2.01.

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information set forth under Item 1.01 is incorporated by
reference into this Item 2.03.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

The financial statements of Neese will be filed by an amendment
to this Form 8-K within 71 calendar days of the date hereof.

(b) Pro forma financial information

Pro forma financial information will also be filed by an
amendment to this Form 8-K within 71 calendar days of the date
hereof.

(d) Exhibits

The following exhibits are filed herewith:

About 1847 Holdings LLC (OTCMKTS:EFSH)

1847 Holdings LLC is a holding company. The Company operates a consulting and advisory services business with plans to acquire additional small to medium size businesses. The Company plans to offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that has been owned and managed by private equity firms, private individuals or families, financial institutions or large conglomerates. It focuses on various sectors, including consumer products, consumer services, business services, consumable industrial products, industrial services, distribution, and alternative/specialty finance. It seeks to acquire controlling interests in businesses that operate in industries with long-term macroeconomic growth opportunities. It also seeks to acquire under-managed or under-performing businesses. 1847 Management Services, Inc. (1847 Management) is a subsidiary of the Company.