Exhibit 10.7





 


 


EMPLOYMENT AGREEMENT


 


This
EMPLOYMENT AGREEMENT, dated as of February 27, 2015 (this “Agreement”), by and between Melissa Heim (“Employee”)
and Eastside Distilling, Inc., a Nevada corporation (the “Company”). Capitalized terms not otherwise defined in this
Agreement shall have the meanings given to them on Annex I hereto.


 


RECITALS


 


WHEREAS, the Company
desires to retain Employee as Master Distiller of the Company, and Employee desires to serve as the Master Distiller of the Company
under the terms and conditions set forth herein.


 


NOW, THEREFORE, in consideration
of the mutual promises and covenants contained in this ‘Agreement, it is agreed by the Company and Employee as follows:


 


AGREEMENT


 


SECTION 1. Employment;
Duties. The Company hereby employs Employee, and Employee hereby accepts employment, as the Master Distiller of the Company.
Employee shall directly report to the President of the Company and shall devote 100% of her business time, energy and skill to
the business of the Company and the promotion of its interests, and the performance of her duties and responsibilities hereunder.
Employee shall comply with the Company’s employment policies and procedures, if any, adopted from time to time by the Board
of Directors of the Company (the “Board”). Employee hereby agrees to obtain any certifications from any governmental
or other regulatory body that the Company deems reasonably necessary for the performance or her duties and responsibilities hereunder.


 


SECTION 2. Term.
Employee’s employment under this Agreement shall be for a term (the “Term”) commencing on the date of
this Agreement and ending on February 27, 2020 (or such earlier date, if any, on which Employee resigns or is terminated by the
Company). So long as Employee has not materially breached the terms of this Agreement beginning on February 27, 2020 and on each
anniversary thereof (each, an “Extension Date”), the Term shall be automatically extended for an additional one-year
period (the “Extended Term”), unless either Party provides the other Party hereto at least twenty (20) days’
prior written notice before the next Extension Date that the Term shall not be so extended.


 


SECTION
3.


 


(a) In consideration for
Employee’s performance of Employee’s duties and responsibilities with the Company, the Company shall pay to Employee,
a base salary of $40,000 per annum (the “Base Salary”). Employee will be paid in bi-weekly installments pursuant
to the Company’s normal payroll policies.


 


(b)
Employee may also receive bonuses, from time to time, in the discretion of the Compensation Committee of the Board, depending
upon Employee’s performance and achievement of specific goals, and upon the profitability of the Company, which bonuses
may be payable in cash, options, and common stock, in the discretion of the Compensation Committee of the Board.


 






     


     


    

 


(c) On or as soon as practicable
after the date of this Agreement, the Company’s Board of Directors shall grant Employee options to purchase a total of 25,000
shares of the Company’s common stock (the “Options”), with an exercise price equal to 100 percent of the Fair
Market Value (as defined in the Company’s 2015 Stock Incentive Plan (the “Plan”))) of the Company’s
Common Stock on the date of grant. The Options shall be granted under the Plan and shall be subject to the terms and conditions
of the Plan. In the event that any provision of this Agreement respecting the Options shall conflict with the terms of the Plan,
however, the terms of this Agreement shall control. The Options shall have a 5-year term. The Options shall become vested and exercisable
over a period of 2-years from the date of grant, with 25% vesting in the first year after grant and the remaining 75% vesting during
the second year following grant; provided, however, that the Options will not begin vesting until 6-months after the date of grant.


 


(d) Employee shall be authorized
to incur, and shall be entitled to receive prompt reimbursement for, all reasonable expenses incurred by Employee in performing
his duties and carrying out the responsibilities hereunder, including business meals, entertainment, and travel expenses, provided
that Employee complies with all of the applicable policies, practices and procedures of the Company related to the submission of
expense reports, receipts, or similar documentation of those expenses. The Company shall either pay directly, or reimburse Employee
for such expenses in accordance with Company policies


 


(e) During the Term, Employee
shall be entitled to participate in the Buyer’s standard benefit plans (“Benefit Coverages”), if any of
general applicability to other senior executives of the Company, and if none are applicable, the Employee shall be entitled to
normal and customary Benefit Coverages applicable to the industry.


 


(f) During the Term, Employee
shall be entitled to up to ten (10) business days of paid vacation days per calendar year, in accordance with the Company’s
vacation policies in effect from time to time.


 


(g) The Company shall withhold
all applicable federal, state and local taxes, social security and workers’ compensation contributions and such other amounts
as may be required by law with respect to the compensation payable to Employee pursuant to this Agreement.


 


(h) The Company shall reimburse
Employee or ll appropriately documented, reasonable business expenses incurred by the Employee in the performance of her or her
duties under this Agreement, in accordance with the Company’s policies in effect from time to time.


 


SECTION
4. Non-solicitation.


 


(a)
Employee acknowledges that the Company, its subsidiaries and its Affiliates have expended and shall continue to expend substantial
amounts of time, money and effort to develop business strategies, employee, client and customer relationships and goodwill to
build an effective organization. Employee acknowledges that employee is and shall become familiar with the confidential information
of the Company, its subsidiaries and its Affiliates, including


 






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trade
secrets, and that Employee’s services are of special, unique and extraordinary value to the Company. Employee acknowledges
that the opportunities of employment and compensation offered under this Agreement are adequate consideration for the covenants
contained in this Section 4. Employee acknowledges that the Company and each of its subsidiaries and Affiliates and their respective
successors, assigns and nominees, has a legitimate business interest and right in protecting its confidential information, business,
strategies, employee, client and customer relationships and goodwill, and that each of the Company, its subsidiaries and Affiliates
and their respective successors, assigns and nominees would be seriously damaged by the disclosure of confidential information
and the loss or deterioration of its business strategies, employee and customer relationships and goodwill.


 


(b)   For
so long as Employee is employed by Company or any of its subsidiaries or Affiliates and for a period of three (3) years thereafter:


 


        (i)
Employee shall not within the Territory, directly or indirectly (whether as a founder, owner, partner, officer, director, employee,
trustee, agent, advisor, principal, substantial equity holder, contractor, consultant or other representative), solicit or accept
or perform any business which is similar to, or in competition with, the businesses in which the Company or any of its subsidiaries
or Affiliates is currently engaged or engages (the “Business”) during the period of Employee’s employment from
any Person who is or was a client or customer of the Company during the Term or otherwise interfere with the Company’s relationship
with any Person who is or was a client or customer of the Company during the Term;


 


        (ii) Employee shall not (x) directly
or indirectly solicit, recruit or hire any Employees of the Company or any of its subsidiaries or Affiliates, or any independent
contractors, consultants or advisors that are engaged by the Company or any of its subsidiaries or Affiliates, in each case who
were employees, independent contractors, consultants or advisors of the Company or any of its subsidiaries or Affiliates at any
time during the Term; (y) solicit or encourage any employees, independent contractors, consultants or advisors to leave the employment
of or engagement with the Company or any of its subsidiaries or Affiliates; or (z) intentionally interfere with the relationship
of the Company or any of its subsidiaries or Affiliates with any employees, independent contractors, consultants or advisors.


 


(c) Employee acknowledges
that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement,
and is in full accord as to the necessity of such restraints for the reasonable and proper protection of the confidential information,
business strategies, intellectual property, employee and customer relationships and goodwill of the Company and its subsidiaries
and Affiliates now existing or to be developed in the future. Employee expressly acknowledges and agrees that each and every restraint
imposed by this Agreement is reasonable with respect to subject matter and time period. Employee expressly acknowledges and agrees
that the restraints imposed by this Agreement will not prevent him from earning a livelihood. Employee agrees to comply with each
of the covenants contained in this Section 4 in accordance with their terms.


 


(d) All agreements, covenants
and provisions of this Section 4 constitute a series of separate covenants. If any provision hereof is determined to be unenforceable,
the same shall be


  






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deemed
deleted, but only with respect to the operation of this Section 4 in the particular jurisdiction in which such determination is
made. The foregoing notwithstanding, if any provision hereof is determined to be unenforceable because of its scope in terms of
territory or duration in time of business activities, but may be enforceable by reason of limitations thereon, such limitations
may be imposed so that such provision, as limited, will be enforceable to the fullest extent permissible under the law applied
consistent with public policy in the applicable jurisdiction. Employee hereby understands and agrees that any violation of this
Section 4 may not be susceptible to an award for damages and, accordingly, that relief for any such violation by Employee may
be the subject of an injunction issued by a court of competent jurisdiction. If any such action is brought by the Company to enforce,
or seek damages for the violation of, the provisions of this Section 4, the unsuccessful party in such litigation shall
pay to the successful party all costs and expenses, including reasonable attorneys’ fees, incurred therein by such successful
party and such costs, expenses and attorneys’ fees shall be included in and as a part of such judgment or award; and the
determination by the judge in such action shall be conclusive on the matter of which party is successful for purposes hereof.


 


(e)        Employee
will not be deemed to have breached her obligations under this Section if Employee owns, directly or indirectly, solely as an
investment, securities of any Person if he (i) is not a controlling person of, or a member of a group which controls, such Person
or (ii) does not, directly or indirectly, own more than ten percent (5%) of any class of securities of such Person.


 


SECTION 5. Confidentiality.
Employee (a) recognizes that the business and financial records, customer and client lists, proprietary knowledge or data, intellectual
property, trade secrets and confidential methods of operations of the Company, its subsidiaries and its Affiliates and their respective
successors, assigns and nominees, as they may exist from time to time and which relate to the then conducted or planned business
of the Company, its subsidiaries and its Affiliates or of entities with which the Company was or is expected to be affiliated during
such periods, are valuable, special and unique assets of the Company, access to and knowledge of which are essential to Employee’s
performance with the Company; and (b) shall not, during or after the Term, disclose any of such records, lists, knowledge, data,
property, secrets, methods or information to any Person for any reason or purpose whatsoever (except for disclosures (x) compelled
by law; provided that Employee promptly notifies the Board of any request for such information before disclosing the same,
if practical, and (y) made as necessary in connection with the performance of her duties with the Company) or make use of any such
property for her own purposes or for the benefit of any Person except the Company. Employee acknowledges that a breach of this
Section 5 may cause irreparable injury to the Company for which monetary damages are inadequate, difficult to compute, or
both. Accordingly, Employee agrees that the provisions of this Section 5 may be enforced by specific performance or other
injunctive relief.


 


SECTION 6. Inventions.
Any and all inventions, processes, procedures, systems, discoveries, designs, configurations, technology, intellectual property,
works of authorship (including, but not limited to, computer programs), trade secrets and improvements (whether or not patentable
and whether or not they are made, conceived or reduced to practice during working hours or using the Company’s or any of
its subsidiaries’ or Affiliates’ data or facilities) and all portions thereof (collectively, the “Inventions”)
which Employee makes, conceives, reduces to practice, or otherwise acquires during her employment with the Company (either


 






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solely
or jointly with others), and which are related to the then present or planned business, services or products of the Company or
any of its subsidiaries or Affiliates, shall be the sole property of the Company and shall at all times and for all purposes be
regarded as acquired and held by Employee in a fiduciary capacity for the sole benefit of the Company. All Inventions that consist
of works of authorship capable of protection under copyright laws shall be prepared by Employee as works made for hire, with the
understanding that the Company shall own all of the exclusive rights to such works of authorship under the United States copyright
law and all international copyright conventions and foreign laws. Employee hereby assigns to the Company, without further compensation,
all such Inventions and any and all patents, copyrights, trademarks, trade names or applications therefore, in the United States
and elsewhere, relating thereto. Employee shall promptly disclose to the Company all such Inventions and shall assist the Company
in obtaining and enforcing for its own benefit patent, copyright and trademark registrations on such Inventions in all countries.
Upon request, Employee shall execute all applications, assignments, instruments and papers and perform all acts, such as the giving
of testimony in interference proceedings and infringement suits or other litigation, necessary or desired by the Company to enable
the Company, its subsidiaries and Affiliates and their respective successors, assigns and nominees to secure and enjoy the full
benefits and advantages of such Inventions.


 


SECTION
7. Termination or Resignation.


 


(a) Employee’s employment
with the Company (including, without limitation, Employee’s rights under this Agreement) may only be terminated by the Company
during the term for Cause (as defined in Annex I), without Cause or as set forth under Section 7(d) below.


 


(b) In the event the Employee
is terminated without Cause, the Employee shall be entitled to receive (i) any amounts earned, accrued or owing but not yet through
the date of such termination; and (ii) a lump sum severance payment in an aggregate amount equal to six months of the Employee’s
then-current Base Salary.


 


(c) If (i) Employee resigns
at any time for any reason or is terminated by the Company for Cause or (ii) the Parties have failed to extend the Term of this
Agreement, the Company shall have liability and obligation under this Agreement for all amounts due and payable to the Employee
through the date of such termination or resignation.


 


(d) The Company may terminate
the Agreement if the Employee is unable to substantially perform her duties and responsibilities hereunder to the full extent required
by the Company by reason of illness, injury or incapacity for more than six (6) months in the aggregate during any period of twelve
(12) calendar months. In the event of such termination, the Company shall pay the Employee all amounts due and payable to Employee
through the date of such termination. The Employee agrees, in the event of a dispute under this Section 7(d), to submit to a physical
examination by a licensed physician selected by the Company and reasonably acceptable to the Employee. The Company agrees that
the Employee shall have the right to have her personal physician present at any examination conducted by the physician selected
by the Company.


 


 



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(e) The Term shall terminate
in the event of the Employee’s death. In such event, the Company shall pay to the Employee’s executors, legal representatives
or administrators, as applicable, all amounts due and payable to the Employee through the date of such termination. The Company
shall have no further liability or obligation under this Agreement to her executors, legal representatives, administrators, heirs
or assigns or any other person claiming under or through him except as otherwise specifically provided in this Agreement.


 


SECTION 8. Conflicts
of Interest. Employee hereby represents that he is free to enter into this Agreement, and that her employment by the Company
does not violate the terms of any agreement between him and any third party. Further, in rendering her duties to the Company, Employee
shall not utilize any Invention, discovery, development, improvement, innovation or trade secret in which he or the Company does
not have a proprietary interest.


 


SECTION 9. Return of
Documents and Equipment. Upon termination of Employee’s employment with the Company for any reason, Employee shall forthwith
deliver to the Company and return, and shall not retain, any originals and copies of any books, intellectual property, papers,
customer or client contracts, documents and data or other writings, tapes or records of the Company, regardless of form, format
or media, maintained by Employee or in Employee’s possession (all of the same are hereby agreed to be the property of the
Company).


 


SECTION 10. Miscellaneous.


 


(a) Severability.
If any provision of this Agreement is inoperative or unenforceable for any reason, such circumstances shall not have the effect
of (i) rendering the provision in question inoperative or unenforceable in any other case or circumstance, or (ii) rendering any
other provision or provisions in this Agreement invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses, sections or subsections of this Agreement shall not affect the remaining portions
of this Agreement.


 


(b) Notices. Any
notices and other communications made or required in connection with this Agreement shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the Party to be notified, (ii) when sent by confirmed facsimile, if sent during normal business
hours of the recipient, and if not, then on the next business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written notification of receipt. All notices shall be addressed as follows or at such
address as such Party may designate by ten (10) days advance written notice to the other Parties hereto:


 


		(A)	if to Employee: 



 


Melissa Heim


[Street Address]


[City, State, Zip]


  



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		(B)	if to the Company:



 


c/o Eastside Distilling, Inc.


1805 SE Martin Luther King Jr. Blvd


Portland, Oregon 97214


 


(c) Entire Agreement.
This Agreement constitutes the entire agreement between the parties with respect to the subject matter addressed herein and supersedes
all prior agreements and understandings, both written and oral, between the parties with respect to Employee’s employment
with the Company.


 


(d) Counterparts. This Agreement
may be executed in counterparts, each of which shall be deemed an original and all of which shall together constitute one and the
same instrument.


 


(e) Governing Law.
This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of
the State of Oregon without giving effect to the conflict of laws rules thereof.


 


(f) Arbitration.
Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration administered
by the American Arbitration Association in the State of Oregon in accordance with the Commercial Arbitration Rules and judgment
o the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof..


 


(g) Benefit and Assignability.
The rights, benefits, duties and obligations under this Agreement shall inure to the benefit of, and be binding upon, (x) the
Company and its successors, and (y) Employee and her legal representatives. This Agreement constitutes a personal service agreement,
and the performance of Employee’s obligations under this Agreement may not be transferred or assigned by Employee. This
Agreement may be assigned by the Company in its sole discretion. The provisions of Sections 4, 5, 8, 9, 1O(a), 1O(f), 1O(g), 1
O(i) and 1OG) shall continue in full force and effect notwithstanding the termination of Employee’s employment with the
Company.


 


(h) Amendments; Waiver.
No amendment, modification or discharge of this Agreement, and no waiver under this Agreement, shall be valid or binding unless
set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, discharge or waiver
is sought. The waiver by either Party of a breach of any provision of this Agreement by the other Party shall not operate or be
construed as a waiver of any subsequent breach by such other Party.


 


(i) Specific Performance.
The Parties acknowledge that their obligations under this Agreement are unique and that damages may be an inadequate remedy for
any failure to perform such obligations as a result of any breach of this Agreement by any Party and, therefore, any Party to whom
performance is owed under any provision of this Agreement shall be entitled to an injunction to be issued, or specific enforcement
be ordered, by any court of competent jurisdiction to require any other Party to perform its obligations under this Agreement and


 






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prevent
any other Party from breaching, or continuing to breach, any provision of this Agreement. In the event that any dispute regarding
this Agreement is resolved by a court, the prevailing Party shall be entitled to recover from the non-prevailing Party the fees,
costs and expenses (including, but not limited to, the reasonable fees and expenses of counsel) incurred by the prevailing Party
in connection with such dispute.


 


g)
Limitation of Liability. Notwithstanding anything contained herein to the contrary, no officer, director or member of the
Company shall have any personal liability to fund any payments that are required to be made to Employee pursuant to this Agreement.


 


(k)
Section Headings. The headings herein are inserted as a matter of convenience only and do not define, limit or describe
the scope of this Agreement or the intent of the provisions hereof.


 


 


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IN
WITNESS WHEREOF, the Company
and Employee have executed
this Agreement as
of the day and year
first above written.


 


 


EMPLOYEE:


 


/s/ Melissa Heim                           


Melissa Heim


 


COMPANY:


 


EASTSIDE DISTILLING,
INC.


 


 


By:/s/ Steven Earles                     


Steven Earles


CEO


 


 


 


 














    


[Signature
Page to Employment
Agreement)







     


    

 


 


ANNEX I DEFINITIONS


 


For
all purposes of this Agreement, unless the context clearly indicates a contrary intent: “Affiliate” means any
Person that directly, or indirectly, through one or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person means power, direct or indirect, to direct or
cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract
or otherwise.


 


“Cause”
means any of the following: (i) any willful or grossly negligent and continued failure by Employee to perform her duties under
this Agreement in any material respect that is not promptly (but in no event later than ten (I 0) business days after written notice
thereof is received by Employee or such longer period of time not to exceed thirty (30) days if the nature of such failure makes
it impractical to cure within ten (I0) business days) cured by resuming the performance of such duties; provided, however,
that for the purposes of determining whether conduct constitutes willful or grossly negligent conduct, no act on Employee’s
part shall be considered “willful” unless it is done by the Employee in bad faith or without reasonable belief that
such action was in the best interests of the Company; (ii) Employee embezzles or converts to her own use any funds of the Company
or any business opportunity of the Company; (iii) Employee destroys or converts to her own use any property of the Company, without
the Company’s consent; (iv) Employee is convicted of or enters a guilty plea or plea of no contest with respect to a felony;
(v) Employee commits an act of moral turpitude which could reasonably be expected to injure or pose a threat of injury or material
economic harm to the Company or any of its Affiliates; or (vi) Employee is habitually intoxicated or is addicted to a controlled
substance and such controlled substance is illegal or materially interferes with the performance of her duties; provided however.
that Employee shall be permitted to seek medical treatment for a reasonable period of time prior to any termination pursuant to
this clause (vi).


 


“Parties” means Employee and the
Company.


 


“Person”
means any natural person, firm, partnership, association, corporation, company, trust, business trust, governmental authority or
other entity.


 


“Territory” means the World


 


Capitalized terms in this
Agreement, defined in this Annex I and elsewhere parenthetically, have the meanings ascribed to them and include the plural as
well as the singular.