Exhibit 10.1

 

EXECUTION COPY

 

AMENDMENT AGREEMENT

 

This Amendment Agreement (this “Agreement”) is entered into as of April 14,
2016, by and between Eastside Distilling, Inc., a Nevada corporation with
offices located at 1805 SE Martin Luther King Jr. Blvd., Portland, Oregon 97214
(the “Company”), WWOD Holding, LLC, a New York limited liability company
(“WWOD”) and MR Group I LLC, a New York limited liability company (the
“Investor”), with reference to the following facts:

 

A.           On September 10, 2015, WWOD purchased that certain Secured
Convertible Promissory Note (the “Initial Note”), in the aggregate initial
principal amount of $275,000, from the Company pursuant to that certain
Securities Purchase Agreement, dated September 10, 2015, by and between, WWOD
and Eastside (the “Existing Securities Purchase Agreement”) and initially
convertible into shares of Common Stock (as defined in the Existing Purchase
Agreement) (the “Initial Conversion Shares”). Capitalized terms not defined
herein shall have the meaning as set forth in the Existing Securities Purchase
Agreement as amended hereby (the “Amended Securities Purchase Agreement”);

 

B.           Concurrently herewith, WWOD, the Investor and certain members of
the Investor have entered into a Contribution Agreement, dated as of the date
hereof (the “Contribution Agreement”), pursuant to which immediately prior to
the Additional Closing Date (as defined below), WWOD shall contribute, transfer
and assign the Initial Note to the Investor.

 

C.           The Company desires to sell, and the Investor desires to purchase,
an additional secured convertible promissory note to the Investor (the
“Additional Note”, and together with the Initial Note, the “Notes”), initially
convertible into shares of Common Stock (the “Additional Conversion Shares”, and
together with the Initial Conversion Shares, the “Conversion Shares”, and
together with the Notes, the “Securities”) in the form attached hereto as
Exhibit A.

 

D.           The parties hereto further desire, (i) as of the Effective Time, to
amend the Securities Purchase Agreement and the other Transaction Documents to
reflect the proposed Additional Closing (as defined below) and (ii) as of the
Additional Closing Date, (A) to amend and restate the Security Agreement in the
form attached hereto as Exhibit B, and (B) to amend the Initial Note and the
other Transaction Documents as described below.

 

NOW, THEREFORE, in consideration of the premises set forth above, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

 

 

 

1.          Amendments, Consents and Waivers.

 

(a)          Amendments to Securities Purchase Agreement. As of the Effective
Time, the Existing Securities Purchase Agreement shall be amended as follows:

 

(i)         Recital B is hereby amended and restated as follows:

 

Buyer desires to purchase and the Company desires to issue and sell, upon the
terms and conditions set forth in this Agreement 14% secured convertible notes
of the Company, in the form attached hereto as Exhibit A, in the aggregate
principal amount of $575,000 (together with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the "Notes"), convertible into shares of common stock of
the Company, $0.0001 par value (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in such Notes

 

(ii)         Section 1 shall be amended by adding the following as Section 1(d):

 

(d)         Additional Closings.

 

(1)         Additional Closing. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 1(d)(3) below, the Company shall issue and sell
to the Buyer, and the Buyer shall purchase from the Company on the Additional
Closing Date (as defined below), an additional Note (the “Additional Note”) in
the original principal amount of $300,000 for a purchase price of $200,000 (the
“Additional Closing”). As additional conditions to the Additional Closing, (x)
the Company shall execute and deliver to the Buyer the Notice and
Acknowledgement and Joinder Agreement, in the form attached as Exhibit A to the
Contribution Agreement (as defined in the Amendment Agreement) and (y) the
Company shall obtain irrevocable written instructions of the Company’s transfer
agent with respect to the Additional Note, duly executed and delivered to the
Buyer by the Company and its transfer agent, in form and substance reasonably
satisfactory to the Buyer.

 

(2)         Additional Closing Date. The date and time of the Additional Closing
(the “Additional Closing Date,”) shall be 10:00 a.m., New York time, on the date
hereof (or such other date as is mutually agreed to by the Company and the
Buyer).

 

(3)         Additional Closing Mechanics. On the Additional Closing Date, (i)
the Buyer shall pay the purchase price for the Additional Note to be issued and
sold to it at the Additional Closing (the "Additional Closing Purchase Price")
by wire transfer of immediately available funds to the Company, in accordance
with the Company's written wiring instructions, against delivery of the Note in
the principal amount as is set forth immediately below the Buyer's name on the
signature pages hereto, and (ii) the Company shall deliver such duly executed
Additional Note on behalf of the Company, to the Buyer, against delivery of such
Purchase Price.

 

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(b)          Amended and Restated Security Agreement and Guarantees. As of the
Additional Closing Date, the Security Agreement shall be amended and restated in
the form attached hereto as Exhibit B. On or prior to the first business day
after the time of formation of any direct, or indirect, U.S. subsidiary of the
Company, such subsidiary shall execute and deliver to the Investor a guarantee
in a form reasonably acceptable to the Investor.

 

(c)          Amendments to Initial Note. As of the Effective Time, the Initial
Note shall be amended as follows:

 

(i)          Section 1.1 of the Initial Note is hereby amended to delete the
following:

 

provided, however, that in no event shall the Holder be entitled to convert any
portion of this Note in excess of that portion of this Note upon conversion of
which the sum of (1) the number of shares of Common Stock beneficially owned by
the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of
the Notes or the unexercised or unconverted portion of any other security of the
Borrower subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock. For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of
such proviso, provided, further, however, that the limitations on conversion may
be waived by the Holder upon, at the election of the Holder, not less than 61
days’ prior notice to the Borrower and the provisions of the conversion
limitation shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver)

 

(ii)         Section 1.1 of the Initial Note is hereby amended to add the
following as 1.1(a) thereof:

 

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(a)          Limitations on Conversions. The Company shall not effect the
conversion of any portion of this Note, and the Holder shall not have the right
to convert any portion of this Note pursuant to the terms and conditions of this
Note and any such conversion shall be null and void and treated as if never
made, to the extent that after giving effect to such conversion, the Holder
together with the other Attribution Parties collectively would beneficially own
in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock
outstanding immediately after giving effect to such conversion. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties (as defined
below) shall include the number of shares of Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of Common Stock issuable
upon conversion of this Note with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (A) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of the other Attribution Parties and (B)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any convertible notes
or convertible preferred stock or warrants) beneficially owned by the Holder or
any other Attribution Party subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 1.1(a). For purposes of
this Section 1.1(a), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). For purposes of determining the number of outstanding shares of Common
Stock the Holder may acquire upon the conversion of this Note without exceeding
the Maximum Percentage, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (x) the Company’s most recent Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the SEC, as the case may be, (y) a more recent public
announcement by the Company or (z) any other written notice by the Company or
the Transfer Agent, if any, setting forth the number of shares of Common Stock
outstanding (the “Reported Outstanding Share Number”). If the Company receives a
Conversion Notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall notify the Holder in writing of the number of shares
of Common Stock then outstanding and, to the extent that such Conversion Notice
would otherwise cause the Holder’s beneficial ownership, as determined pursuant
to this Section 1.1(a), to exceed the Maximum Percentage, the Holder must notify
the Company of a reduced number of shares of Common Stock to be purchased
pursuant to such Conversion Notice. For any reason at any time, upon the written
or oral request of the Holder, the Company shall within one (1) Business Day
confirm orally and in writing or by electronic mail to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Note, by the Holder and
any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common
Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of Common
Stock (as determined under Section 13(d) of the Exchange Act), the number of
shares so issued by which the Holder’s and the other Attribution Parties’
aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess
Shares”) shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time
increase (with such increase not effective until the sixty-first (61st) day
after delivery of such notice) or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that (i)
any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and (ii)
any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Notes that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Note in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the
Exchange Act. No prior inability to convert this Note pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of convertibility. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 1.1(a) to the extent
necessary to correct this paragraph (or any portion of this paragraph) which may
be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 1.1(a) or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitation contained
in this paragraph may not be waived and shall apply to a successor holder of
this Note. For the purpose of this Section 1.1(a), “Attribution Parties” means,
collectively, the following Persons and entities: (A) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time
to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its affiliates or principals, (B) any
direct or indirect affiliates of the Holder or any of the foregoing, (C) any
Person acting or who could be deemed to be acting as a “group” (as that term is
used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder,
each, a “Group”) together with the Holder or any of the foregoing and (D) any
other Persons whose beneficial ownership of the Company’s Common Stock would or
could be aggregated with the Holder’s and the other Attribution Parties for
purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the
foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

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(iii)        The defined term “DWAC” is hereby amended and restated as
“Deposit/Withdrawal at Custodian”.

 

(d)          Other Amendments to Transaction Documents. At the Effective Time,
the Transaction Documents (including the Existing Securities Purchase Agreement
and the Security Agreement) shall be amended as follows:

 

(i)          The defined term “Amendment Agreement” shall mean “that certain
Amendment Agreement, dated as of April 14, 2016, by and between the Company and
the Buyer”.

 

(ii)         The defined term “Transaction Documents” is hereby amended to
include the Amendment Agreements.

 

(iii)        The defined term “Note” is hereby amended to include the Additional
Note (as defined in the Securities Purchase Agreement (as amended by the
Amendment Agreement)).

 

(iv)        The defined term “Closing” is hereby amended to include the
Additional Closing (as defined in the Securities Purchase Agreement (as amended
by the Amendment Agreement)), mutatis mutandis.

 

(v)         The defined term “Closing Date” is hereby amended to include the
Additional Closing Date (as defined in the Securities Purchase Agreement (as
amended by the Amendment Agreement)), mutatis mutandis.

 

(vi)        The defined term “Purchase Price” is hereby amended to include each
Additional Closing Purchase Price (as defined in the Securities Purchase
Agreement (as amended by the Amendment Agreement)), mutatis mutandis.

 

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(vii)       The defined term “Buyer” is hereby amended to include MR Group I,
LLC, with the understanding that WWOD was the Buyer for the Initial Note, has
previously paid the Purchase Price on the Initial Note and, immediately prior to
the Additional Closing, assigned the Initial Note to the Investor and Investor
is the Buyer for the Additional Note and solely responsible for payment of the
Additional Closing Purchase Price for the Additional Note.

 

(e)          Rollover of Additional Note. The parties hereto acknowledge and
agree that, in connection with the consummation of the transactions contemplated
in the term sheet attached hereto as Exhibit C (the “Subsequent Placement”),
$200,000 of aggregate principal of the Additional Note, together with any
accrued, and unpaid, interest then outstanding under the Additional Note, shall
be applied, on a dollar-for-dollar basis, to reduce the purchase price of the
Investor in such Subsequent Placement and upon the closing of such Subsequent
Placement and such application, the remainder of the Additional Note then
outstanding shall be deemed cancelled for no additional consideration.

 

(f)          Waiver of Adjustments. Effective as of the Additional Closing Date,
the Investor hereby waives any adjustments to the conversion price of the
Initial Note solely as a result of the issuance by the Company of any “Excluded
Securities” (as defined in the Additional Note).

 

(g)          Acknowledgement; Reaffirmation of Obligations; Consent. The Company
hereby confirms and agrees that, except as set forth in Section 1 above, (i) the
Existing Securities Purchase Agreement, the Notes, the Security Agreement and
each other Transaction Document is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, (ii) to the extent
that the Security Agreement or any other Transaction Document purports to assign
or pledge to the Buyer, or to grant to the Buyer a security interest in or lien
on, any collateral as security for the obligations of the Company from time to
time existing in respect of the Note and any other Transaction Document, such
pledge, assignment and/or grant of the security interest or lien is hereby
ratified and confirmed in all respects, and shall apply with respect to the
obligations under the Note, (iii) the execution, delivery and effectiveness of
this Agreement shall not operate as an amendment of any right, power or remedy
of the Buyer under any Transaction Document, nor constitute an amendment of any
provision of any Transaction Document and (iv) upon the issuance of the
Additional Note at the Additional Closing, the Additional Note shall rank pari
passu with the outstanding Note and to the extent that the Security Agreement or
any other Transaction Document purports to assign or pledge to the holders of
the Note, or to grant to the Buyer a security interest in or lien on, any
collateral as security for the obligations of the Company from time to time
existing in respect of the Note and any other Transaction Document, such pledge,
assignment and/or grant of the security interest or lien is hereby ratified and
confirmed in all respects, and shall also apply with respect to the obligations
under the Additional Note. WWOD hereby confirms that it consents to the issuance
of the Additional Note, including the amendment and restatement of the Security
Agreement contemplated herein to include the Additional Note, pari passu, with
the Initial Note with respect to the security interest granted pursuant to the
Transaction Documents (as amended hereby) and further confirms that it has
assigned its right of first refusal contained in Section 4(p) of the Existing
Securities Purchase Agreement to the Investor.

 

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2.          Fees and Expenses. The Company shall reimburse the Investor for all
costs and expenses incurred by it or its affiliates in connection with the
structuring, documentation, negotiation and closing of the transactions
contemplated by the Transaction Documents (including, without limitation, as
applicable, a non-accountable reimbursement for fees and expenses of Kelley Drye
& Warren LLP, counsel to the Investor, in an aggregate amount not to exceed
$15,000 without the prior written consent of the Company (the “Lead Counsel
Expense Cap”), and any other reasonable fees and expenses of the Investor in
connection with the structuring, documentation, negotiation and closing of the
transactions contemplated by the Transaction Documents and due diligence and
regulatory filings in connection therewith) (the “Transaction Expenses”) and
shall be withheld by the Investor from its Additional Closing Purchase Price at
the Closing; provided, that, the Company shall promptly reimburse the Investor
(or, as applicable and subject to the Lead Counsel Expense Cap, Kelley Drye &
Warran LLP) on demand for all Transaction Expenses not so reimbursed through
such withholding at the Closing. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, transfer agent
fees, Depository Trust Company fees or broker’s commissions (other than for
Persons engaged by the Investor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold the Investor harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in
this Agreement and the Transaction Documents, each party to this Agreement shall
bear its own expenses in connection with the transactions contemplated hereby.

 

3.          Disclosure of Transactions and Other Material Information. On or
before 8:30 a.m., New York City time, on the Business Day following the date of
this Agreement, the Company shall file a Current Report on Form 8-K describing
the terms of the transactions contemplated by this Agreement in the form
required by the 1934 Act and attaching the form of the Agreements as an exhibit
to such filing (including all attachments, the “8-K Filing”). From and after the
filing of the 8-K Filing with the SEC, the Investor shall not be in possession
of any material, nonpublic information received from the Company, any of its
Subsidiaries or any of their respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing.

 

4.          Representations and Warranties.

 

4.1           Investor Bring Down. The Investor hereby represents and warrants
to the Company with respect to itself only as set forth in Section 2 of the
Amended Securities Purchase Agreement as to this Agreement as if such
representations and warranties were made as of the date hereof and as of the
Effective Time, in each case, as set forth in their entirety in this Agreement.
Such representations and warranties to the transactions thereunder and the
securities issued pursuant thereto are hereby deemed for purposes of this
Agreement to be references to the transactions hereunder and the issuance of the
securities pursuant hereto.

 

4.2           Company Bring Down. Except as set forth on Schedule 4.2 attached
hereto, the Company represents and warrants to the Investor as set forth in
Section 3 of the Amended Securities Purchase Agreement as if such
representations and warranties were made as of the date hereof and as of the
Effective Time, in each case, as set forth in their entirety in this Agreement.

 

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5.          Effective Time. This Agreement shall be effective upon the execution
of this Agreement by the Investor, WWOD and the Company (such time, the
“Effective Time”).

 

6.          Miscellaneous Provisions. Section 8 of the Securities Purchase
Agreement is hereby incorporated by reference herein, mutatis mutandis; provided
however that the address for notices for Investor shall be:

 

MR Group, I, LLC

c/o Magna Equities II LLC
5 Hanover Square
16th Floor
New York, NY 10004

 

with a copy to

 

WWOD Holdings LLC
535 Fifth Avenue
4th Floor
New York, NY 10017

 

with a copy (for information purposes only) to:

 

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Michael Adelstein, Esq.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the Investor, WWOD and the Company have caused their
respective signature page to this Agreement to be duly executed as of the date
first written above.

 

  COMPANY:       EASTSIDE DISTILLING, INC.       By: /s/ Steven Earles   Name:
Steven Earles     Title: CEO         INVESTOR:       MR GROUP I LLC         By:
/s/ Joshua Sason    

Name: Joshua Sason

    Title: CEO         WWOD:         WWOD HOLDING, LLC         By: /s/ Neil B.
Rock     Name: Neil B. Rock     Title: Sole Member