CONVERTIBLE NOTE PURCHASE AGREEMENT

 

This Convertible Note Purchase Agreement (the “Agreement”) is made as of March
23, 2014 by and between East Shore Distributors, Inc. (to be renamed Crimson
Forest Entertainment Group, Inc.), a Nevada corporation (the “Company”), and
PORTNICE INVESTMENT LIMITED, a British Virgin Islands corporation (“Purchaser”).

 

RECITALS

 

The Company desires to issue and sell, and the Purchaser desires to purchase,
convertible promissory note(s) in substantially the form attached to this
Agreement as Exhibit B (the “Note” or “Notes”) which shall be convertible on the
terms stated therein into common stock or Capital Stock of the Company in
accordance with the terms set forth in this Agreement. As used herein, the term
“Capital Stock” means common stock or preferred stock of the Company issued in a
Qualified Financing as the case may be, as defined in the Note. The Notes and
the Capital Stock issuable upon conversion thereof are collectively referred to
herein as the “Securities.”

 

AGREEMENT

 

In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:

 

1. Purchase and Sale of Notes.

 

(a) Sale and Issuance of Notes. Subject to the terms and conditions of this
Agreement, at the Closing (as defined below) the Company agrees to sell and
issue to Purchaser, up to $2,000,000 in principal amount of Notes. The purchase
price of each Note shall be equal to 100% of the principal amount of such Note.

 

(b) Closings; Delivery.

 

(i) The initial purchase and sale of the Notes shall take place at the offices
of Richardson & Patel LLP, 1100 Glendon Avenue, Suite 850, Los Angeles,
California, at 4:00 p.m., on March 23, 2014, or at such other time and place as
the Company and the Purchaser mutually agree upon, orally or in writing (which
time and place are designated as the “Initial Closing”). In the event there is
more than one closing, the term “Closing” shall apply to each such closing,
unless otherwise specified herein.

 

(ii) At each Closing, the Company shall deliver to the Purchaser the Note to be
purchased by the Purchaser against (1) payment of the purchase price therefor by
check payable to the Company or by wire transfer to a bank designated by the
Company, (2) delivery of counterpart signature pages to this Agreement and the
Note, and (3) delivery of a validly completed and executed IRS Form W-8 BEN or
IRS Form W-9, as applicable, establishing the Purchaser’s exemption from
withholding tax, which forms shall be furnished by the Company.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT1 

 

 

(iii) The Company shall conduct subsequent closings (each, a “Closing”) at such
dates and in such principal amounts as specified in writing by the Purchaser;
for each subsequent Closing, the terms and conditions of this Agreement shall
apply, and the Company shall appropriately update, and furnish Purchaser a copy
of, Exhibit A to reflect Note(s) issued in each subsequent Closing.

 

(iv) The Company may sell and issue up to an aggregate maximum of $2,000,000 in
principal amount of Notes to the Purchaser prior to March 23, 2019; provided
however, after the initial Closing the Purchaser may but shall have no
obligation to loan additional funds to the Company, and provided further that
the Purchaser shall designate the timing and amount of any additional Notes
purchased from the Company, subject to the terms and conditions of this
Agreement.

 

(v) For purposes of this Agreement, and all other agreements contemplated
hereby, any additional purchaser so acquiring Notes shall be deemed to be a
“Purchaser” for purposes of this Agreement, and any notes and so acquired by
such additional purchaser shall be deemed to be “Notes” and “Securities” as
applicable.

 

2. Notice of Conversion. In the event that Purchaser desires to convert Note(s),
the Purchaser agrees to complete, execute and deliver to the Company a notice of
conversion in the form attached as Exhibit C. In the event that the Purchaser
elects to convert its Note(s) into Capital Stock in a Qualified Financing (as
defined in the Note), the Purchaser agrees to execute and deliver the investment
documents substantially in the same for as executed and delivered by the other
participants in the Qualified Financing.

 

3. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Purchaser that:

 

(a) Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite corporate power and authority to carry on
its business as now conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a material adverse effect on its
business or properties.

 

(b) Authorization. This Agreement and the Notes have been duly authorized by the
Board of Directors of the Company; however, (i) the Company has not obtained the
necessary corporate approval for the authorization of any Capital Stock, and
(ii) the Company’s Articles of Incorporation has not been amended to provide for
the issuance of the Capital Stock. This Agreement and the Notes, when executed
and delivered by the Company, shall constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT2 

 

 

(c) Absence of Required Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement, except for
such filing(s) pursuant to applicable securities laws as may be necessary, which
filings will be timely effected after the Closing.

 

(d) Offering. Subject in part to the truth and accuracy of the Purchaser’s
representations set forth in Section 4 of this Agreement, the offer, sale and
issuance of the Notes as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended, and will
not result in a violation of the qualification or registration requirements of
any applicable state securities laws.

 

4. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company that:

 

(a) Authorization. Such Purchaser has full power and authority to enter into
this Agreement. This Agreement, when executed and delivered by the Purchaser,
will constitute a valid and legally binding obligation of the Purchaser,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
any other laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of a specific
performance, injunctive relief, or other equitable remedies.

 

(b) Purchase Entirely for Own Account. This Agreement is made with the Purchaser
in reliance upon the Purchaser’s representation to the Company, which by the
Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the
Securities to be acquired by the Purchaser will be acquired for investment for
the Purchaser’s own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring any of the Securities.

 

(c) Knowledge. The Purchaser is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities.

 

(d) Restricted Securities. The Purchaser understands that the Securities have
not been, and will not be, registered under the Securities Act of 1933, as
amended (the “Securities Act”), by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser’s representations as expressed herein. The Purchaser understands that
the Securities are “restricted securities” under applicable U.S. federal and
state securities laws and that, pursuant to these laws, the Purchaser must hold
the Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the
Securities for resale. The Purchaser further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of sale,
the holding period for the Securities, and on requirements relating to the
Company which are outside of the Purchaser’s control, and which the Company is
under no obligation and may not be able to satisfy.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT3 

 

 

(e) No Public Market. The Purchaser understands that no public market now exists
for any of the securities issued by the Company, that the Company has made no
assurances that a public market will ever exist for the Securities.

 

(f) Legends. The Purchaser understands that the Securities, and any securities
issued in respect thereof or exchange therefor, may bear one or all of the
following legends:

 

(i) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH
THE ACT.”

 

(ii) Any legend required by the Blue Sky laws of any state to the extent such
laws are applicable to the shares represented by the certificate so legended.

 

Notwithstanding anything herein to the contrary, no such registration statement
or opinion of counsel shall be necessary for a transfer by a Purchaser that is a
partnership or limited liability company to a partner of such partnership or a
member of such limited liability company or a retired partner of such
partnership who retires after the date hereof or a retired member of such
limited liability company who retires after the date hereof, or to the estate of
any such partner, retired partner, member or retired member or the transfer by
gift, will or intestate succession by any partner or member to his or her spouse
or to the siblings, lineal descendants or ancestors of such partner or member or
his or her spouse, if the transferee agrees in writing to be subject to the
terms hereof to the same extent as if he or she were an original Purchaser
hereunder.

 

(g) Accredited Investor. The Purchaser is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(h) Foreign Investors. If a Purchaser is not a United States person (as defined
by Rule 902(k) under the Securities Act), such Purchaser hereby represents that
it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Securities
or any use of this Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Securities, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Securities. Such Purchaser’s subscription and payment
for, and his or her continued beneficial ownership of the Securities, will not
violate any applicable securities or other laws of Purchaser’s jurisdiction.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT4 

 

 

5. Conditions of the Purchaser’s Obligations at Closing. The obligations of the
Purchaser to the Company under this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions, unless otherwise
waived:

 

(a) Representations and Warranties. The representations and warranties of the
Company contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the date of the Closing.

 

(b) Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.

 

6. Conditions of the Company’s Obligations at Closing. The obligations of the
Company to the Purchaser under this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions, unless otherwise
waived:

 

(a) Representations and Warranties. The representations and warranties of the
Purchaser contained in Section 4 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the Closing.

 

(b) Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.

 

(c) Delivery of Form W-8 BEN or Form W-9. The Purchaser shall have completed and
delivered to the Company a validly executed IRS Form W-8 BEN or IRS Form W-9, as
applicable, establishing the Purchaser’s exemption from withholding tax.

 

7. Covenants. The Company agrees to take any and all actions necessary to
increase the number of shares of its authorized common stock to 500,000,000
shares, on or prior to December 31, 2014.

 

8. Miscellaneous.

 

(a) Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT5 

 

 

(b) Governing Law. This Agreement and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law. Venue for
the enforcement of this Agreement and the Notes shall be in state or federal
court in Los Angeles County, California, and the Company hereby consents to
personal jurisdiction in Los Angeles County, California. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE NOTES.

 

(c) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

 

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

 

(e) Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service or confirmed facsimile, electronic
mail (to and from e-mail addresses specified in writing by each party as valid
addresses for such purpose), or 48 hours after being deposited in the U.S. mail
as certified or registered mail with postage prepaid, if such notice is
addressed to the party to be notified at such party’s address or facsimile
number as set forth below or as subsequently modified by written notice.

 

(f) Finder’s Fee. Each party represents that it neither is nor will be obligated
for any finder’s fee or commission in connection with this transaction. The
Purchaser agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finder’s fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Purchaser or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless the Purchaser from any liability for any commission or compensation in
the nature of a finder’s fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.

 

(g) Amendments and Waivers. Any term of this Agreement and any term of the Notes
may be amended or waived only with the written consent of the Company and the
holders of a majority in principal amount of the Notes. Any amendment or waiver
effected in accordance with this Section 8(g) shall be binding upon the
Purchaser and each transferee of the Securities, each future holder of all such
Securities, and the Company.

 

(h) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.

 

CONVERTIBLE NOTE PURCHASE AGREEMENT6 

 

 

(i) Entire Agreement. This Agreement, and the documents referred to herein
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof, and any and all other written or oral agreements existing
between the parties hereto are expressly canceled.

 

(j) Exculpation of Purchaser. The Purchaser acknowledges that it is not relying
upon any person, firm or corporation, other than the Company, in making its
investment or decision to invest in the Company. The Purchaser agrees that the
Purchaser nor the respective controlling persons, officers, directors, partners,
agents, or employees of the Purchaser shall be liable for any action heretofore
or hereafter taken or omitted to be taken by any of them in connection with the
Securities.

 

(k) Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT
OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

 

[Signature Pages Follow]

 

CONVERTIBLE NOTE PURCHASE AGREEMENT7 

 

 

IN WITNESS WHEREOF, the parties have executed this Convertible Note Purchase
Agreement as of the date first written above.

 

COMPANY: EAST SHORE DISTRIBUTORS, INC.       /s/ Jonathan Lim   Jonathan Lim  
Chief Executive Officer       Address:       8335 Sunset Boulevard, Suite 238  
West Hollywood, CA 90069   Facsimile: (323) 337-8088     PURCHASER:       Date:
March 23, 2014 PORTNICE INVESTMENT LIMITED   a British Virgin Islands
corporation       /s/ Anthony Lim   (Signature)       Anthony Lim   (Authorized
Representative)       Director   (Title)

 

  Address for Notices:                   Facsimile:         E-mail:        
Principal Amount:

 

CONVERTIBLE NOTE PURCHASE AGREEMENT8 

 

 

EXHIBIT A

 

SCHEDULE OF NOTES ISSUED

 

Name and Address  Note
Principal Amount   Issue Date              Portnice Investment Limited 
$250,000    3/23/2014             Portnice Investment Limited  $250,000  
 6/13/2014

 

CONVERTIBLE NOTE PURCHASE AGREEMENT9 

 

 

EXHIBIT B

 

FORM OF CONVERTIBLE PROMISSORY NOTE

 

CONVERTIBLE NOTE PURCHASE AGREEMENT10 

 

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.

 

CONVERTIBLE PROMISSORY NOTE

 

Date: 

Los Angeles, California

 

For value received, EAST SHORE DISTRIBUTORS, INC. (to be renamed Crimson Forest
Entertainment Group, Inc.), a Nevada corporation (the “Company”), promises to
pay to PORTNICE INVESTMENT LIMITED, a British Virgin Islands corporation (the
“Holder”), the principal sum of _______________.

 

Interest shall accrue from the date of this Note on the unpaid principal amount
at a rate equal to 3.80% per annum, compounded annually, based on a 365 day
year. This Note is one of a series of Convertible Promissory Notes containing
substantially identical terms and conditions, issued pursuant to a Convertible
Promissory Note Purchase Agreement (“Purchase Agreement”) which likewise
contains substantially identical terms and conditions. Such Notes are referred
to herein as the “Notes,” and the holders thereof are referred to herein as the
“Holders.” The Holders of at least 51% of the then-outstanding principal amount
of the Notes are referred to herein as “Majority Holders.” This Note is subject
to the following terms and conditions.

 

1. Maturity. Subject to Section 2, principal and any accrued but unpaid interest
under this Note shall be due and payable on the earlier of (a) the fifth (5th)
year anniversary of the issuance date of this Note, and (b) the consummation of
a Qualified Financing, as defined below (the “Maturity Date”).

 

2. Conversion.

 

(a) Conversion into Shares. The accrued unpaid interest and unpaid principal
amount of this Note (the “Conversion Amount”) shall be convertible at the option
of the Holder (i) into common stock of the Company if converted pursuant to
Section 2(b), or (ii) into the same class of securities issued in a Qualified
Financing (as defined below) which may take the form of preferred stock with
rights preferences and privileges set forth in an amendment to the Articles of
Incorporation of the Company, or common stock, as the case may be (in either
case, “Capital Stock”).

 

1

 

 

(b) Optional Conversion into Common Stock. The Conversion Amount under this Note
shall be convertible into common stock of the Company at any time by the Holder,
upon written notice by the Holder to the Company of the Holder’s election to
convert pursuant to this Section 2(b). The number of shares of common stock into
which this Note shall be convertible shall equal the Conversion Amount divided
by $0.008 (“Default Conversion Price”). The Default Conversion Price shall be
subject to appropriate adjustment upon any stock split, reverse stock split,
recapitalization or similar event affecting the outstanding capital stock of the
Company.

 

(c) Conversion Upon Equity Financing. If the Company intends to execute a bona
fide equity financing transaction involving the issuance of Capital Stock and
resulting in gross proceeds equal to or in excess of $3,000,000, excluding
conversion of the Notes (a “Qualified Financing”) the Company shall notify the
Holders of such event in writing at least thirty (30) days prior to the closing
date of such transaction, and shall provide a summary of terms thereof. The
Majority Holders shall be entitled, if they so elect in writing within ten (10)
days after receipt of such notice, to convert the entire outstanding principal
amount of and accrued interest under all of the Notes into shares of the
Company’s Capital Stock issued and sold at the close of the Company’s Qualified
Financing. The conversion of this Note pursuant to this Section 2(c) is
expressly conditioned upon the closing of said Qualified Financing. The number
of shares of Capital Stock to be issued upon such conversion pursuant to this
Section 2(c) shall be equal to the quotient obtained by dividing (i) the
Conversion Amount of this Note by (ii) the purchase price per share of the
Capital Stock in the Qualified Financing, rounded down to the nearest whole
share, and the issuance of such shares upon such conversion shall deemed a part
of the Qualified Financing, and shall be upon the terms and subject to the
conditions provided in the Qualified Financing. Upon the election of such
conversion of this Note by the Majority Holders (whether or not the Holder has
individually elected to convert), the Holder hereby agrees to so convert this
Note and to execute and deliver to the Company all transaction documents related
to the Qualified Financing, including a purchase agreement and other ancillary
agreements, with customary representations and warranties and having the same
terms and conditions as those agreements entered into by the other purchasers of
the Capital Stock.

 

(d) Mechanics and Effect of Conversion. No fractional shares of the Company’s
Capital Stock will be issued upon conversion of this Note. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Company
will pay to the Holder in cash the amount of the unconverted principal and
interest balance of this Note that would otherwise be converted into such
fractional share. Upon conversion of this Note pursuant to this Section 2, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Company or any transfer agent of the Company. At its expense, the Company will,
as soon as practicable thereafter, issue and deliver to such Holder, at such
principal office, a certificate or certificates for the number of shares to
which such Holder is entitled upon such conversion, including a check payable to
the Holder for any cash amounts payable as described herein. Upon conversion of
this Note, the Company will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.

 

2

 

 

3. Payment; No Prepayment. All payments shall be made in lawful money of the
United States of America at such place as the Holder hereof may from time to
time designate in writing to the Company. This Note may not be pre-paid by the
Company prior to the Maturity Date or date of conversion (as applicable) without
the prior written consent of the Majority Holders.

 

4. Events of Default. If any one or more of the following events shall occur
after the date hereof, it shall be deemed an “Event of Default” hereunder:

 

(a) default by the Company in the due and punctual payment of the principal and
accrued interest when and as such obligation shall become due and payable,
whether at the Maturity Date or at a date fixed for prepayment or by
acceleration or otherwise;

 

(b) insolvency of the Company or generally inability of the Company to meet its
obligations as they mature;

 

(c) the making of a general assignment for the benefit of creditors, consent to
the appointment of a trustee or a receiver or admission of the Company in
writing of its inability to pay its debts as they mature;

 

(d) the appointment of a trustee or receiver for the Company or for a
substantial part of the properties of the Company without the consent of the
Company and such trustee or receiver not being discharged within 90 days;

 

(e) the institution of bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings by or against the Company and, if instituted against it,
the same being consented to by the Company or remaining undismissed for a period
of 90 days;

 

(f) any substantial part of the property of the Company being sequestered or
attached and not being returned to the possession of the Company or released
from such attachment within 90 days; or

 

(g) if Holder exercises its conversion rights in accordance with Section 2(c) of
this Note and if the Company fails to issue duly authorized shares at the
closing of the Qualified Financing.

 

If any such Event of Default shall occur and be continuing, the Holder may, at
the Holder’s option, declare the entire unpaid balance of principal and unpaid
interest on this Note to be immediately due and payable, whereupon the maturity
of the then unpaid balance on this Note shall be accelerated and the principal
and all accrued and unpaid interest thereon shall forthwith become due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived, anything contained herein to the contrary
notwithstanding, and the Holder may exercise and shall have any and all remedies
accorded the Holder by law, including without limitation the right to recover
all fees and expenses, including reasonable attorneys’ fees, incurred in
connection with the enforcement of this Note.

 

3

 

 

To the extent the entire outstanding principal amount of this Note and the
accrued interest thereon are not paid immediately as of the date of the
occurrence of an Event of Default, then from such date until this Note is paid
in full interest on the amounts outstanding under this Note (including accrued
interest as of the occurrence of the Event of Default) shall accrue at the
lesser of (a) the Maximum Rate and (b) 8.0% per annum, compounded annually.

 

5. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Notwithstanding the foregoing, the Holder may not
assign, pledge, or otherwise transfer this Note without the prior written
consent of the Company or the Majority Holders. Thereupon, a new note for the
same principal amount and interest will be issued to, and registered in the name
of, the transferee. Interest and principal are payable only to the registered
holder of this Note.

 

6. Lawful Rate. Notwithstanding anything contained in this Note to the contrary,
the Holder shall never be deemed to have contracted for or be entitled to
receive, collect or apply as interest on this Note any amount in excess of the
amount permitted and calculated at the Maximum Rate (defined below). The Company
shall never be required to pay unearned interest hereon, or to pay interest at a
rate in excess of the Maximum Rate, or in an amount in excess of the maximum
amount of interest permitted to be charged under Applicable Law. The “interest”
shall include the aggregate of all charges which constitute interest under
Applicable Law that are contracted for, charged, reserved, received or paid
under this Note. If under any contingency, the effective rate or amount of
interest that would otherwise be payable under this Note would exceed the
Maximum Rate or maximum amount of interest that the Holder is allowed by
Applicable Law to charge, contract for, take or reserve, or receive, such amount
that would be excessive interest shall be applied to the reduction of the unpaid
principal balance of this Note, and, if the principal balance of this Note is
paid in full, any remaining excess shall forthwith be paid to the Company. The
term “Maximum Rate” as used herein, with respect to the Holder, the maximum
non-usurious interest rate, if any, that, at any time, or from time to time, may
be contracted for, taken, reserved, charged or received on the indebtedness
evidenced by this Note under the laws presently in effect of the State of
California, and to the extent controlling and providing for a different lawful
rate of interest, laws of the United States of America (“Applicable Law”),
applicable to the transactions between the Company and the Holder pursuant to
this Note and such indebtedness or, to the extent permitted by applicable law,
under such applicable laws of the United States of America and the State of
California that may hereafter be in effect and that allow a higher maximum
non-usurious interest rate than applicable laws now allow.

 

7. Governing Law; Waiver of Jury Trial. This Note and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law. Venue for
the enforcement of this Note shall be in state or federal court in Los Angeles
County, California, and the Company hereby consents to personal jurisdiction in
Los Angeles County, California. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS NOTE.

 

4

 

 

8. Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service or confirmed facsimile, or 48 hours
after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, if such notice is addressed to the party to be notified at such
party’s address or facsimile number as provided in the Purchase Agreement or as
subsequently modified by written notice pursuant to the Purchase Agreement.

 

9. Amendments and Waivers. Any term of this Note may be amended only with the
written consent of the Company and the Majority Holders. Any amendment or waiver
effected in accordance with this Section 9 with respect to the Notes shall be
binding upon the Company, each Holder and each transferee of any Note.

 

10. Stockholders, Officers and Directors Not Liable. In no event shall any
stockholder, officer or director of the Company be liable for any amounts due or
payable pursuant to this Note.

 

11. Counterparts. This Note may be executed in any number of counterparts, each
of which will be deemed to be an original and all of which together will
constitute a single agreement.

 

[Signature Page Follows]

 

5

 

 

This Convertible Promissory Note has been executed and delivered by the Company
as of the date first set forth above.

 

COMPANY: EAST SHORE DISTRIBUTORS, INC.         Jonathan Lim   Chief Executive
Officer       Address:       8335 Sunset Boulevard, Suite 238   West Hollywood,
CA 90069   Facsimile: (323) 337-8088

 

AGREED TO AND ACCEPTED:       Date: March 23, 2014 PORTNICE INVESTMENT LIMITED  
a British Virgin Islands corporation         (Signature)       (Authorized
Representative)       (Title)

 

 

 

 

EXHIBIT C

 

NOTICE OF CONVERSION

 

PORTNICE INVESTMENT LIMITED, a British Virgin Islands corporation (“Holder”)
hereby elects to convert $________________ of the principal and $_____________
of accrued interest under the Note issued by EAST SHORE DISTRIBUTORS, INC. (the
“Company”) (or by the Company as subsequently renamed), dated ______________,
into shares of capital stock of the Company in accordance with the terms of the
Note and Securities Purchase Agreement dated March 23, 2014, as follows:

 

Conversion Pursuant To:   [  ]  Section 2(b) – Common Stock at $0.008 / share  
          [  ]  Section 2(c) – Qualified Financing  

 

Principal Amount of Note:   $                                              
Accrued Interest Under Note:   $                                              
Date of Conversion:                                                   
Conversion Price:   $____ per share   Class of Stock:  
                                                 Number of Shares to Be
Delivered:                                                   

 

The undersigned Holder has executed and delivered this Notice of Conversion to
the Company as of the date set forth below.

 

Date: _______________ PORTNICE INVESTMENT LIMITED   a British Virgin Islands
corporation         By:         Name:         Its:

 

The Holder hereby directs that the conversion shares be deposited to the
following account:

 

Account Name: PORTNICE INVESTMENT LIMITED Account No.:   Address:       Broker:
  DTC No.: _____ (four digit code)