Document:

Exhibit
10.1

 

NOTE
PURCHASE AGREEMENT

 

Date:
October 6, 2022

 

Parties:

 

	“Aegis”	Aegis
    Security Insurance Company

    4431
    N. Front Street, Suite 200, Harrisburg, PA 17110

	“Eastside”	Eastside
    Distilling, Inc., a Nevada corporation

    2321
    NE Argyle Street, Unit D, Portland, Oregon 97211

	“Craft
    Canning”	Craft
    Canning + Bottling LLC, an Oregon limited liability company

    2321
    NE Argyle Street, Unit D, Portland, Oregon 97211

 

Agreement:

 

	1.	Definitions.
	 	 
	a.	Unless
                                            otherwise defined herein, the following terms are used herein as defined in the UCC: Accounts,
                                            Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
                                            Documents, Electronic Chattel Paper, Equipment, Farm Products, Fixtures, General Intangibles,
                                            Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights,
                                            Proceeds, Supporting Obligations and Tangible Chattel Paper.
	 	 
	b.	As
                                            used in this Agreement, the following terms have the following meanings:

 

“Bankruptcy
Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

 

“Collateral”
means all property and interests in property in or upon which a security interest, mortgage, pledge or other lien is granted pursuant
to this Agreement.

 

“Loan
Parties” means Eastside and Craft Canning.

 

“Obligations”
means all present and future debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time
owing by either Loan Party to Aegis, whether evidenced by this Agreement, the Note, the Note Guaranty or otherwise, whether arising from
an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect, whether absolute or contingent, whether due
or to become due, and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.

 

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“Permitted
Liens” means (a) purchase money security interests in specific items of Equipment; (b) liens for taxes, fees, assessments,
or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings
have the effect of preventing the enforcement of such lien) for which adequate reserves in accordance with GAAP are being maintained,
provided, that the same have no priority over any of Aegis’ security interests; (c) liens of materialmen, mechanics,
carriers, or other similar liens arising in the ordinary course of business and securing obligations which are not delinquent or are
being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such lien)
for which adequate reserves in accordance with GAAP are being maintained; (d) liens which constitute banker’s liens, rights of
set-off, or similar rights as to deposit accounts or other funds maintained with a bank or other financial institution (but only to the
extent such banker’s liens, rights of set-off or other rights are in respect of customary service charges relative to such deposit
accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to
any Loan Party); (e) cash deposits or pledges of an aggregate amount not to exceed $10,000 to secure the payment of worker’s compensation,
unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid
or performance bonds, or other obligations of a like nature incurred in the ordinary course of business; and (f) the specific lien of
Engs Commercial Capital LLC and the specific lien of First Interstate Bank as to each of which Aegis is on this date executing a subordination
agreement.

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees
or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

 

“UCC”
means, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of Oregon or such other applicable
jurisdiction.

 

	2.	Purchase
                                            of Note.
	 	 
	a.	On
                                            the Closing Date, Aegis will purchase from Eastside and Eastside will execute and deliver
                                            to Aegis a Secured Promissory Note in the principal amount of Four Million Five Hundred Thousand
                                            Dollars ($4,500,000) in the form annexed hereto as Appendix A (the “Note”).
	 	 
	b.	The
                                            “Purchase Price” for the Note will be Four Million Five Hundred
                                            Thousand Dollars ($4,500,000) payable as follows:

 

		i.	Payment
                                            shall be made to TQLA, LLC, a California limited liability company (“TQLA”),
                                            in full satisfaction of the Amended and Restated Secured Line of Credit Promissory Note dated
                                            August 4, 2022, which payment shall be in the amount designated as “Loan Payoff”
                                            on the Loan Payoff Schedule annexed hereto as Appendix B. Payment shall be wired to TQLA
                                            in accordance with the instructions for payment set forth on the Loan Payoff Schedule.

 

		ii.	The
                                            balance of the Purchase Price will be wired to the account of Eastside designated by Eastside
                                            for this purpose.

 

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	3.	Closing
                                            Date. The “Closing Date” will be the first date on which
                                            all of the following conditions have been satisfied, unless the Parties designate a subsequent
                                            date:

 

		i.	Aegis
                                            shall have completed its business and legal due diligence pertaining to the Loan Parties,
                                            with results satisfactory to Aegis in its sole discretion.
	 	 	 
		ii.	California
                                            Bank and Trust shall have issued to Aegis an irrevocable letter of credit (the “ILOC”)
                                            securing payment of the balance of principal on the Note, including standard terms for such
                                            instruments as well as the specific terms set forth on Appendix C hereto. Aegis shall be
                                            entitled to draw upon the ILOC to the extent of any principal amount of the Note that is
                                            due, payable, and unpaid.
	 	 	 
		iii.	Craft
                                            Canning shall have signed and delivered to Aegis the Note Guaranty in the form annexed hereto
                                            as Appendix D.
	 	 	 
		iv.	Each
                                            of Aegis, First Interstate Bank and Craft Canning shall have entered into a subordination
                                            agreement on mutually agreeable terms providing for subordination of Aegis’ lien on
                                            the assets of Craft Canning to the lien of First Interstate Bank on specific assets of Craft
                                            Canning.
	 	 	 
		v.	Each
                                            of Aegis, ENGS Commercial Capital LLC and Craft Canning shall have entered into a subordination
                                            agreement on mutually agreeable terms providing for subordination of Aegis’ lien on
                                            the assets of Craft Canning to the lien of ENGS Commercial Capital LLC on specific assets
                                            of Craft Canning.

 

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	4.	Grant
                                            of Security Interest.
	 	 
	a.	To
                                            secure the full payment and performance of all of the Obligations, each Loan Party hereby
                                            assigns to Aegis and grants to Aegis a continuing security interest in all property of such
                                            Loan Party, whether tangible or intangible, real or personal, now or hereafter owned, existing,
                                            acquired or arising and wherever now or hereafter located, and whether or not eligible for
                                            lending purposes, including: (a) all Accounts and all Goods whose sale, lease or other disposition
                                            by such Loan Party has given rise to Accounts and have been returned to, or repossessed or
                                            stopped in transit by, such Loan Party; (b) all Chattel Paper (including Electronic Chattel
                                            Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications,
                                            trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright
                                            applications, registrations, licenses, software, franchises, customer lists, tax refund claims,
                                            claims against carriers and shippers, guarantee claims, contracts rights, payment intangibles,
                                            security interests, security deposits and rights to indemnification); (c) all Inventory;
                                            (d) all Goods (other than Inventory), including Equipment, Farm Products, Health-Care-Insurance
                                            Receivables, vehicles, and Fixtures; (e) all Investment Property, including, without limitation,
                                            all rights, privileges, authority, and powers of such Loan Party as an owner or as a holder
                                            of Pledged Equity, including, without limitation, all economic rights, all control rights,
                                            authority and powers, and all status rights of such Loan Party as a member, equity holder
                                            or shareholder, as applicable, of each Issuer; (f) all Deposit Accounts, bank accounts, deposits
                                            and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims; (i) all Supporting
                                            Obligations; (j) any other property of such Loan Party now or hereafter in the possession,
                                            custody or control of Aegis or any agent of Aegis, for any purpose (whether for safekeeping,
                                            deposit, collection, custody, pledge, transmission or otherwise), and (k) all additions and
                                            accessions to, substitutions for, and replacements, products and Proceeds of the foregoing
                                            property, including proceeds of all insurance policies insuring the foregoing property, and
                                            all of such Loan Party’s books and records relating to any of the foregoing and to
                                            such Loan Party’s business. Notwithstanding the foregoing, no Loan Party shall pledge,
                                            and the Collateral shall not include, (i) Equipment or other property owned by any Loan Party
                                            on the date hereof or hereafter acquired that is subject to a lien securing capitalized leases
                                            and purchase money indebtedness to the extent and for so long as the documentation providing
                                            for such capitalized leases and purchase money indebtedness prohibits the creation of a lien
                                            on such assets (other than to the extent that any such term or prohibition would be rendered
                                            ineffective after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
                                            successor provision or provisions) or any other applicable law (including the Bankruptcy
                                            Code), (ii) any United States intent-to-use trademark applications to the extent that the
                                            grant of a security interest therein would impair the validity or enforceability of such
                                            intent-to-use trademark applications under applicable Federal law, and (iii) assets and property
                                            to the extent such assets and property are subject to a term or a rule of law, statute or
                                            regulation that restricts, prohibits, or requires a consent (that has not been obtained)
                                            of a Person (other than such Loan Party) to, the creation, attachment or perfection of the
                                            security interest granted herein, and any such restriction, prohibition and/or requirement
                                            of consent is effective and enforceable under applicable law and is not rendered ineffective
                                            by applicable law (including, without limitation, pursuant to Sections 9-406, 9-407, 9-408
                                            or 9-409 of the UCC); provided, that with respect to any such limitation described
                                            in the foregoing clauses (i) and (iii), immediately upon the ineffectiveness,
                                            lapse or termination of any such restriction, the Collateral shall include, and such Loan
                                            Party shall be deemed to have granted a lien on such property under this Agreement as if
                                            such restriction had never been in effect.
	 	 
	b.	Each
                                            Loan Party will, and will cause the other Loan Party to, at any time upon the reasonable
                                            request of Aegis, execute or deliver to Aegis any and all financing statements, fixture filings,
                                            security agreements, pledges, assignments, mortgages, deeds of trust, opinions of counsel,
                                            and all other documents (the “Additional Documents”) that Aegis
                                            may reasonably request in form and substance reasonably satisfactory to Aegis, to create,
                                            perfect, and continue to be perfected or to better perfect Aegis’s liens in all of
                                            the assets of each of the Loan Parties (whether now owned or hereafter arising or acquired,
                                            tangible or intangible, real or personal), and in order to fully consummate all of the transactions
                                            contemplated hereby. To the maximum extent permitted by applicable law, if any Loan Party
                                            refuses or fails to execute or deliver any reasonably requested Additional Documents within
                                            a reasonable period of time following the request to do so, each Loan Party hereby authorizes
                                            Aegis to execute any such Additional Documents in the applicable Loan Party’s name
                                            and authorizes Aegis to file such executed Additional Documents in any appropriate filing
                                            office
	 	 
	c.	Each
                                            Loan Party authorizes Aegis to file, transmit, or communicate, as applicable, from time to
                                            time, Uniform Commercial Code financing statements, along with amendments and modifications
                                            thereto, in all filing offices selected by Aegis, listing such Loan Party as the debtor and
                                            Aegis as the secured party, and describing the collateral covered thereby in such manner
                                            as Aegis may elect, including using descriptions such as “all personal property of
                                            debtor” or “all assets of debtor” or words of similar effect. Each Loan
                                            Party also hereby ratifies its authorization for Aegis to have filed in any filing office
                                            any financing statements filed prior to the date hereof.

 

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	5.	Covenants
                                            of Loan Parties.
	 	 
	a.	Hinterkopf
                                            D240.2 Printer. Until all Obligations are satisfied, without the written consent of Aegis,
                                            Craft Canning will neither sell nor lease nor encumber the Hinterkopf D240.2 can printer
                                            now owned by Craft Canning.
	 	 
	b.	Barrel
                                            Inventory. Eastside pledges in this Agreement its inventory of barreled whiskey, inter
                                            alia, to secure payment of the Note. Attached hereto as Appendix E is an independent
                                            report stating that the 2,229 units of barreled whiskey owned by Eastside as of February
                                            17, 2022 had a net orderly liquidation value of $5,466,373 on that date. Until all obligations
                                            are satisfied, without the written consent of Aegis, Eastside will not sell barrel inventory
                                            in bulk. “In bulk” shall be 10 barrels in a 6-month period. Resale in bulk by
                                            Eastside of barrels repurchased from Ultrapure during 2022 shall not be considered a breach
                                            of this covenant.
	 	 
	c.	Taxes.
                                            Each Loan Party will timely pay all applicable Taxes, assessments, deposits and contributions
                                            owing by such Loan Party in the future as they became due and payable. Each Loan Party may,
                                            however, defer payment of any contested Taxes; provided, that such Loan Party (i) in good
                                            faith contests its obligation to pay such Taxes by appropriate proceedings promptly and diligently
                                            instituted and conducted; (ii) notifies Aegis in writing of the commencement of, and any
                                            material development in, the proceedings; (iii) posts bonds or takes any other commercially
                                            reasonable steps required to keep the contested taxes from becoming a lien upon any of the
                                            Collateral and (iv) maintains adequate reserves therefor in conformity with GAAP.
	 	 
	6.	Negative
                                            Covenants of Loan Parties. No Loan Party shall, without Aegis’ prior written
                                            consent:
	 	 
	a.	merge
                                            or consolidate with another Person;
	 	 
	b.	acquire
                                            any assets except in the ordinary course of business;
	 	 
	c.	enter
                                            into any transaction outside the ordinary course of business;
	 	 
	d.	sell,
                                            transfer, return, or dispose of any Collateral or other assets with an aggregate value in
                                            excess of $10,000 in any calendar month, other than:

 

		i.	the
                                            sale by Loan Parties of Inventory in the ordinary course of its business;

 

		ii.	the
                                            sale of Accounts Receivable by Craft Canning pursuant to its Factoring and Security Agreement
                                            with Engs Commercial Capital LLC dated August 16, 2022 and amended on September 6, 2022,
                                            or

 

		iii.	any
                                            sale, disposition, or transfer of obsolete, worn-out or unneeded Equipment;

 

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	e.	create,
                                            incur, assume or suffer to exist any lien or other encumbrance of any nature whatsoever,
                                            other than in favor of Aegis to secure the Obligations, on any of the Collateral whether
                                            now or hereafter owned, other than Permitted Liens;
	 	 
	f.	guaranty
                                            or otherwise become liable with respect to the obligations of any Person other than (i) the
                                            Obligations;
	 	 
	g.	pay
                                            or declare any dividends or other distributions on any Loan Party’s Equity Interests
                                            (except for (x) dividends payable solely in capital stock or other Equity Interests of such
                                            Loan Party and (y) dividends or distributions to Eastside by Subsidiaries of Eastside);
	 	 
	h.	redeem,
                                            retire, purchase or otherwise acquire, directly or indirectly, any of Loan Party’s
                                            equity interests; or
	 	 
	i.	pay
                                            any principal or other amount on any indebtedness that is contractually subordinated to Aegis
                                            in violation of the applicable subordination or intercreditor agreement or optionally prepay,
                                            redeem, defease, purchase, or otherwise acquire any indebtedness of any Loan Party.
	 	 
	7.	Termination.
                                            This Agreement will terminate and have no further force or effect if the Closing Date does
                                            not occur within five business days after the date of this Agreement first written above.

 

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IN
WITNESS WHEREOF, the Parties have signed this Agreement as of the date first set forth above.

 

	 	EASTSIDE DISTILLING, INC.
	 	 	 
	 	By:
    	/s/
    Geoffrey Gwin
	 	Name:
    	Geoffrey
    Gwin
	 	Title:
    	Chief
    Executive Officer
	 	 	 
	 	CRAFT CANNING + BOTTLING, LLC
	 	 	 
	 	By:
    	/s/
    Geoffrey Gwin
	 	Name:
    	Geoffrey
    Gwin
	 	Title:
    	Manager
	 	 	 
	 	AEGIS SECURITY INSURANCE COMPANY
	 	 	 
	 	By:
    	/s/
    W.J. Wollyung III
	 	Name:
    	W.J.
    Wollyung III
	 	Title:
    	CEO/President

 

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Appendices

 

	A.	Secured
                                            Promissory Note
	 	 
	B.	Loan
                                            Payoff Schedule – TQLA
	 	 
	C.	Terms
                                            of ILOC
	 	 
	D.	Note
                                            Guaranty
	 	 
	E.	Valuation
                                            of Barreled Whiskey

 

    	8Exhibit
10.2

 

THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE LAW, AND NO INTEREST
OR PARTICIPATION HEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR AN EXEMPTION THEREFROM.

 

SECURED
PROMISSORY NOTE

 

	$4,500,000.00
	 	October 6, 2022
	 	 	Portland,
Oregon

 

FOR
VALUE RECEIVED, EASTSIDE DISTILLING, INC., a Nevada corporation (the “Company”), hereby promises to pay to the order
of Aegis Security Insurance Company (“Holder”), the aggregate principal amount of Four Million Five Hundred Thousand
Dollars ($4,500,000.00), together with the Commitment Fee described herein, together with interest on the aggregate principal balance
(which shall not include the Commitment Fee), all as set forth in this Secured Promissory Note (this “Note”). This
Note is issued pursuant to the Note Purchase Agreement among the Company, the Holder and Craft Canning + Bottling LLC (the “Note
Purchase Agreement”), which contains covenants applicable to the obligation under this Note.

 

	1.	Payments
                                            and Advances.

 

(a) Interest
Rate. The unpaid principal balance of this Note will bear interest at 9.25% per annum. Interest shall commence with the date of the
Note (i.e. October 6, 2022, the “Loan Date”) and shall continue on the outstanding principal amount of this Note until
this Note is paid or otherwise satisfied in full. Interest shall be paid every three (3) months after the interest commence date, except
that interest for the three month period ending January 6, 2023 shall not be payable until February 7, 2023. Interest will be computed
based on a 365-day year and the actual days elapsed and will be compounded annually. If any Event of Default, as defined in Section 2,
occurs, then during the continuance of the Event of Default, all principal under this Note shall bear interest on each day outstanding
at the lesser of (i) eighteen percent (18%) per annum compounded quarterly or (ii) the highest lawful rate in effect on such day (the
“Default Rate”).

 

(b) Commitment
Fee. In consideration of undertakings by Holder herein, Company will pay to Holder a fee in the amount of Forty-Five Thousand Dollars
($45,000) (the “Commitment Fee”). The Commitment Fee will be due and payable in full on the Maturity Date of this Note.

 

(c) Repayment
of Principal and Interest. All payments of interest and principal on the Note and the Commitment Fee shall be in lawful money of
the United States of America by wire transfer of immediately available funds to the Holder’s account at a bank specified by Holder
in writing to the Payor from time to time. All payments on this Note under this Section 1(c) will be applied to accrued and unpaid interest
that is due and payable, then to the Commitment Fee, then to accrued and unpaid interest not yet payable, and thereafter to outstanding
principal. Whenever any payment hereunder shall be stated to be due on a day other than a business day, such payment will be made on
the next succeeding business day, and such extension of time will in such case be included in the computation of payment of interest.

 

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(i) All
unpaid principal, together with any then unpaid and accrued interest, and the Commitment Fee will be due and payable in cash on the first
anniversary of the Loan Date (the “Maturity Date”). Accrued interest will be paid in arrears in cash on the last business
day of every three calendar months from the Loan Date commencing on the first such date to occur after the Loan Date.

 

(ii) Company
may obtain a 6-month extension of the Maturity Date by paying an extension fee equal to one percent (1%) of the then principal balance.
Company may obtain a second 6-month extension (i.e. an extension to the second anniversary of the Loan Date) by paying a second extension
fee equal to one percent (1%) of the then principal balance. However, Holder shall have no obligation to extend the Maturity Date on
either occasion if: (a) the Company is in default under the terms of this Note; (b) the Company has committed a material breach of any
covenant in this Note or in the Note Purchase Agreement; or (c) the Holder in good faith believes itself insecure.

 

(d) Prepayment.
The Company may prepay this Note at any time in whole or in part, without the consent of Holder and without premium or penalty.

 

		2.	Default.

 

(a) Event
of Default. The occurrence of any of the following will constitute an “Event of Default” under this Note:

 

(i) The
Company fails to pay timely amounts when due under this Note, and such failure continues for ten (10) days following written notice of
non-payment; provided that notice of non-payment shall not be required as a condition to an Event of Default if the Company fails to
pay Holder the entire amount of outstanding principal, the Commitment Fee, and any remaining accrued interest in full on or prior to
the Maturity Date;

 

(ii) The
Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors;

 

(iii) An
involuntary petition is filed against the Company (unless such petition is dismissed or discharged within sixty (60) days under any bankruptcy
statute now or hereafter in effect), or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official)
is appointed to take possession, custody or control of any property of the Company;

 

(iv) Company
breaches any representation or warranty in any material respect or otherwise fails to perform or observe any covenant or agreement in
any material respect set forth in this Note or in the Note Purchase Agreement and such failure continues for twenty (20) days following
written notice from Holder;

 

(v) The
sale, transfer, pledge, hypothecation or liquidation of all or subsequently all of the assets or equity securities of Company;

 

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(vi) The
merger of Company with another corporation or other legal entity if (a) the Company is not the surviving entity or (b) there is a transfer
of 15% or more of Company’s outstanding shares to another owner or owners within a 6-month period of time or (c) there is a change
in 50% or more of the existing Board of Directors of Company within one year of the Loan Date; or

 

(vii) Company
is liquidated or winds up its affairs.

 

(b) Rights
of Holder Upon Default. If there shall be any Event of Default under Section 2(a)(i), after the expiration of any required notice
or cure period, this Note shall accelerate and all unpaid principal and interest, if any, shall become immediately due and payable upon
notice of acceleration from Holder to the Company. If there shall be any Event of Default under Sections 2(a)(ii), 2(a)(iii), or (2(a)(v)-(vii)
this Note shall immediately accelerate and all unpaid principal, the Commitment Fee and interest, if any, shall become immediately due
and payable without any requirement of notice from Holder to the Company. Upon an Event of Default, Holder may exercise any right, power
or remedy permitted to it by law or this Note, including foreclosure of the Collateral identified in the Note Purchase Agreement.

 

		3.	Restriction
                                            on Further Indebtedness. The Company agrees that. unless Holder shall otherwise consent
                                            in writing, it shall cause Craft Canning not to create, incur, assume or in any manner become
                                            liable in respect of, or suffer to exist, any indebtedness other than (a) indebtedness incurred
                                            or guaranteed by Craft Canning in effect as of the date hereof, (b) trade debt incurred in
                                            the ordinary course of business, (c) capital leases of digital can printers specifically
                                            described in the Security Guaranty dated as of the Loan Date, and (d) indebtedness that is
                                            expressly subordinate and junior in right and priority of payment to the Note that is reasonably
                                            satisfactory in form and substance to Holder.

 

		4.	Other
                                            Provisions.

 

(a) Cancellation.
After all principal and interest and the Commitment Fee owed on this Note have been paid in full, this Note will automatically be deemed
canceled, will be surrendered to the Company for cancellation, and will not be re-issued.

 

(b) Waivers
and Amendments. This Note may not be amended or modified, nor may any of its terms be waived, except by a written instrument signed
by the Company and Holder.

 

(c) Severability.
If any provision of this Note is determined to be invalid, illegal or unenforceable, in whole or in part, the validity, legality and
enforceability of any of the remaining provisions or portions of this Note will not in any way be affected or impaired thereby and this
Note will nevertheless be binding between the Company and Holder.

 

(d) Governing
Law. This Note will be governed by and interpreted in accordance with the internal laws of the Commonwealth of Pennsylvania. In any
action brought or arising out of this Note, the Company and Holder hereby consent to the jurisdiction of any federal or state court having
proper venue within the County of Dauphin, Commonwealth of Pennsylvania and also consent to the service of process by any means authorized
by Pennsylvania law.

 

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(e) Collateral.
The Holder shall have the right to request an updated description of the Company’s collateral and the value of the collateral securing
this loan monthly upon seven (7) days’ Notice.

 

 (f) Attorney Fees.

 

(i)
Company agrees to pay Holder’s collection expenses, attorney fees and paralegal fees which may be incurred in the collection of
any amount due hereunder or enforcement or interpretation of any or all of Company’s duties hereunder or any guaranty related to
Company’s duties hereunder, or any part hereof or thereof, whether or not suit is instituted, and if suit is instituted, to pay
all such collection expenses, court costs, attorney fees and paralegal fees as may be determined by the trial court or any appellate
courts. Company further agrees to pay any attorney fees, paralegal fees or costs incurred by Holder with respect to Company’s obligations
hereunder in connection with any action or proceeding to enforce any creditor’s rights associated with any collateral securing
this Note, or with respect to any bankruptcy, receivership or insolvency proceedings of Company or any guarantor of Company’s obligations
hereunder, whether judicial or otherwise, including but not limited to fees incurred in litigating issues peculiar to federal bankruptcy
law;

 

(ii)
Company agrees to reimburse Holder for all costs, reasonable attorney fees, and paralegal fees incurred by Holder in the research, review,
negotiation, and drafting of the Note, the Note Purchase Agreement, the Note Guaranty and any other documents or matters related to this
$4,500,000 loan transaction. Company shall reimburse Holder by payment in cash or certified check within seven (7) days of written request,
including via email.

 

(g) Jury
Trial Waiver. Holder and the Company each hereby waive any right to trial by jury of any claim (including crossclaims and counterclaims)
it may have against each other under, in connection with, or related to this Note or the Note Purchase Agreement.

 

(h) Binding
Effect. This Note will be binding upon, and will inure to the benefit of, the Company and Holder and their respective successors
and assigns.

 

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 (i) Notices. Any notice required or desired to be served, given, or delivered hereunder must be in writing and in the form and manner specified below, and must be addressed to the party to be notified as follows:

 

	If
    to the Company:

     

     

     

     

     

     

    With
    a copy to:
	EASTSIDE
    DISTILLING, INC.

    2321
    NE Argyle Street, Unit D

    Portland,
    OR 97211

    Attention:
    Controller

    Email:
    TMilton@eastsidedistilling.com

     

    Robert
    Brantl, Esq.

    181
    Dante Ave.

    Tuckahoe
    , NY 10707

    Email:
rbrantl21@gmail.com

	 	 
	If
    to Holder:

     

     

     

     

    

    With
    a copy to:
	AEGIS
    SECURITY INSURANCE COMPANY

    4431
    N. Front Street, Suite 200

    Harrisburg,
    PA 17110 Email: wwollyung@aegisinsco.com

     

    Russell
    R. Kilkenny

    Scarborough,
    McNeese, Oelke & Kilkenny PC

    5
    Centerpointe Drive, Suite 240

    Lake
    Oswego, OR 97035

    Email:
    rrk@smoklaw.com

 

or
to such other address as each party designates to the other by notice in the manner herein prescribed. Any notice given under this Note
shall be in writing and delivered in person, via email, or other form of electronic delivery, sent by documented overnight delivery service
or mailed by certified or registered mail, postage prepaid, to the appropriate party or parties at the addresses referenced above or
the electronic email address, or to such other address as the parties may hereinafter designate. Unless otherwise specified in this Note,
all such notices and other written communications shall be effective (and considered received for purposes of this Note) (a) if delivered
by hand, upon delivery, (b) if by email or other form of electronic delivery, on the next business day, or (c) if sent by documented
overnight delivery service, on the date delivered.

 

(j) Transfer
of Note. This Note has not been registered under the Securities Act of 1933 or applicable state law, and no interest or participation
herein may be sold, distributed, assigned, offered, pledged or otherwise transferred unless there is an effective registration statement
under the Act and applicable state securities laws covering any such transaction or an exemption therefrom and upon approval by the Company.
In the event this Note is transferred in accordance with this Section 3(j), the new holder shall be deemed to be the “Holder”
with respect to the provisions of this Note.

 

[Remainder
of Page Left Intentionally Blank; Signature Page Follows]

 

    	5 of 6

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Secured Promissory Note to be executed as of the day and year first written above.

 

	HOLDER:
    AEGIS SECURITY INSURANCE COMPANY 	 	COMPANY:
    EASTSIDE DISTILLING, INC. 
	 	 	 	 	 
	By:	/s/ W.J. Wollyung III	 	By:	/s/
    Geoffrey Gwin
	Name:	W.J. Wollyung III	 	Name:	Geoffrey
    Gwin
	Title:	CEO/President	 	Title:	Chief
    Executive Officer

 

    	6 of 6

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