Document:

ex10-1.htm

Exhibit 10.1

 

ENGAGEMENT AGREEMENT

September 15, 2015

Personal & Confidential

Mr. Charles O’Dowd

ABCO Energy, Inc.

2100 North Wilmot #211

Tucson, AZ 85712

Re:           Engagement Agreement

Proposed Offering of Debt Securities Pursuant to Rule 144A

Dear Mr. O’Dowd

This letter sets forth the terms under which ABCO Energy, Inc., a Nevada corporation (the “Company”) engages Adamas Fund LLC  (the “Advisor) as its agent for purposes of providing capital markets advisory, consulting and legal services to Company in connection with a contemplated offering of its debt securities [“Debt Securities”]  pursuant to an exemption from registration found in Section 5 of the Securities Act of 1933 and, specifically, Rule 144A promulgated thereunder (the “Proposed Transaction”)(the “Agreement”). In accordance therewith, the parties hereto agree as follows:

1. The Effective Date of this engagement agreement shall be September 15, 2015

2. Company hereby retains Advisor as its exclusive agent for purposes of providing capital markets advisory, consulting and legal services to Company in connection with the Proposed Transaction.  Advisor services shall specifically include, but are not limited to: (a) the identification and retention of suitable legal counsel for purposes of representing the Company in connection with the Proposed Transaction and before any self-regulatory or government agency; (b) the identification and retention of one or more suitable FINRA broker-dealers to purchase the Company's Debt Securities in connection with the Proposed Transaction;  (c) raise a minimum of $3,000,000 , on a best efforts basis, for the Company within 60 days of the date of the delivery of final version of the Debt Securities, in form and content satisfactory to the Company  [“Final Debt Securities”] and (d) general consultative and financial analysis offered to the Company in connection with the planning and execution of the Proposed Transaction. In such manner, Advisor shall hold himself available to Company to take, or cause to take, such action reasonably necessary for the successful execution of the Proposed Transaction. The general terms and provisions of the Debt Securities such as term, conversion price[s], etc., shall be set forth on Exhibit A attached hereto, subject to final negotiations between the parties hereto.

3. Company shall pay Advisor the sum of $150,000.00 payable, at the sole option of the Company, in cash or in shares of the Company’s common stock (“Fee Shares”), or any combination thereof, for services rendered to the Company pursuant to this Agreement. (The “Consulting Fee”). The Fee Shares shall be freely tradable pursuant to a registration statement on Form S-8

4. The Consulting Fee shall be payable two [2]  equal payments as follows:

          (a) The first payment shall be 375,000 Fee Shares based upon an agreed price per share of $0.20. payable within five [5] days of the effective date of the S-1 RS and  (b) the second payment [“2nd Payment”]  of $75,000.00 shall be in cash or in  Fee Shares  or any combination thereof, payable on the date that the form of the  Final Debt Securities  is delivered to the Company. The price per share to be utilized to determine the Fee Share number portion of the 2nd Payment shall be 50% of the trailing 30 day average between the bid and asked prices as quoted on the OTCQB Market or such other trading market as shall be applicable at the time the price is determined, as aforesaid.

 

 

 

  

  

  

5. Advisor shall be bear any legal costs associated with this Agreement. Advisor has identified the law firm of Securities Compliance Group, Ltd [“SCG”] as suitable counsel for Company in connection therewith. Company agrees to execute any necessary engagement agreement directly with SCG so as to properly engage the attorneys of such firm. Advisor further represents that the attorneys of SCG have agreed to be retained by Company on terms hereinbefore negotiated by Advisor and such attorneys have agreed to make themselves reasonably available for the timely execution of the Proposed Transaction. Any costs and expenses reasonably related to the Proposed Transaction other than the aforementioned shall be borne by Company.

 

6. All obligations of Advisor contained herein shall be subject to Advisor's reasonable availability for such performance, in view of the nature of the requested service and the amount of notice received. Advisor shall devote such time and effort to the performance of its duties hereunder as Advisor shall determine is reasonably necessary for such performance. Accordingly, Company shall furnish to Advisor all information reasonably relevant to the performance by Advisor of its obligation under this Agreement which will permit Advisor to know all facts material to the advice to be rendered.

7. Nothing in this Agreement shall limit or restrict the right of Advisor or any partner, employee, agent or representative of Advisor, to be a partner, director, officer, employee, agent or representative of, or to engage in, any other business, whether of a similar nature or not, nor to limit or restrict the right of Advisor to render services of any kind to any other corporation, firm, individual or association.

8. Advisor will hold in confidence any information which Company provides to Advisor pursuant to this Agreement unless Company gives Advisor permission in writing to disclose such information to a specific third party. All information which Company provides to Advisor in connection with its duties hereunder shall be considered Confidential Information. Notwithstanding the foregoing, Advisor shall not be required to maintain confidentiality with respect to information: (a) which is or becomes part of the public domain; (b) of which it had independent knowledge prior to disclosure; (c) which comes into the possession of Advisor in the normal and routine course of business from and through independent non-confidential sources; (d) which is required to be disclosed by Advisor by governmental requirements. If Advisor is requested or required (by oral questions, interrogatories, requests for information or document subpoenas, civil investigative demands or similar process) to disclose any confidential information supplied to it by Company, or the existence of other negotiations in the course of its dealings with Company, Advisor shall, unless prohibited by law, promptly notify Company of such request(s) so that Company may seek an appropriate protective order.

9. Company agrees to indemnify and hold harmless Advisor, its partners, employees, agents, representatives and controlling persons from any against any and all losses, claims, damages, liabilities, costs and expenses arising only as a result of (and all suits, proceedings or claims in respect thereof) and any legal  or other expenses in giving testimony or furnishing documents in response to subpoena or otherwise (including, without limitation, the cost of investigating, preparing or defending any such action, suit, proceeding or claim, whether or not in connection with any action, suit, proceeding or claim in which Advisor is a party), as and when incurred, directly or indirectly, caused by, relating to, based upon or arising out of Advisor's service pursuant to this Agreement.  Company further agrees that Advisor shall incur no liability to Company or any other party on account of this Agreement or any acts or omissions arising out of or related to the actions of Advisor relating to this Agreement or the performance or failure to perform any services under this Agreement except for Advisor's intentional or willful misconduct.

 

 

 

  

  

  

10. This Agreement may not be transferred, assigned or delegated by any of the parties hereto without the prior written consent of the other party hereto.

11. The failure or neglect of the parties hereto to insist, in any one or more instances, upon the strict performance of any of the terms or conditions contained herein, or their waiver of strict performance of any of the terms or conditions of this Agreement, shall not be construed as a waiver or relinquishment in the future of such terms or condition, but the same shall continue in full force and effect.

12. This Agreement is for a term of one (1) year (the “Term). Paragraphs 4, 8 and 9 shall survive the expiration of this Agreement under all circumstances.

13. Any notices hereunder shall be sent to Company and to Advisor at their respective addresses set forth above. Any notice shall be given by registered or certified mail, postage prepaid, and shall be deemed to have been given when deposited in the United States Mail. Either party may designate any other address to which notice shall be given, by giving written notice to the other of such change of address in the manner herein provided.

14. This Agreement has been made in the State of Illinois, United States of America and shall be construed and governed in accordance with the laws thereof without giving effect to principles governing conflicts of law.

15. This Agreement contemplates the entire agreement between the parties and may not be altered or modified except in writing and signed by the party to be charged thereby. This Agreement supersedes any and all previous agreement between the parties relating to the subject matter hereof.

16. This Agreement shall be binding upon the parties hereto, the indemnified parties referred to in paragraph 8, and their respective heirs, administrators, successors and permitted assigns.

 

 

  

  

  

 

Agreed to and accepted this 15th day of September, 2015

ADAMAS FUND LLC

BY:  /s/ Spiros Sinnis                                 

        Spiros Sinnis, President and CEO

                    Advisor

FOR THE COMPANY:

Agreed to and accepted this 15th day of September, 2015

/s/ Charles O’Dowd                                   

By: Charles O’Dowd

Its: Chief Executive OfficerExhibit 4.1

 

NEITHER THE ISSUANCE NOR SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES. 

 

	Principal Amount: $275,000	Issue Date: September 10, 2015
	 	 
	Purchase Price: $241,500	 

 

SECURED CONVERTIBLE
PROMISSORY NOTE 

 

FOR VALUE RECEIVED,
EASTSIDE DISTILLING, INC., a NEVADA corporation (hereinafter called the “Borrower”), hereby promises to pay
to the order of WWOD Holdings, LLC, a New York corporation, or registered assigns (the “Holder”) the sum of
Two Hundred Seventy Five Thousand Dollars ($275,000), on May 10, 2016 (the “Maturity Date”), and to pay interest at
the rate of fourteen percent (14%) (the “Interest Rate”) per annum. After the Maturity Date, interest shall continue
to accrue at the then applicable Interest Rate on the Principal Amount outstanding from Maturity Date until the same becomes due
and payable. In addition to the interest payable hereunder, this Note is issued for an original issue discount of $33,500 (the
“Original Issue Discount”). Any reference to the outstanding principal amount of this Note shall include the Original
Issue Discount. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth in Section 1.9 hereof.
Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent
(22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing
on the Issue Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder
(to the extent not converted into common stock, (the “Common Stock”) in accordance with the terms hereof) shall be
made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter
give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be
due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on
such date. As used in this Note, the term “business day” shall mean any day other than a Satur-day, Sunday or a day
on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.
Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities
Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

Starting on the date
that is 30 calendar days after the Issue Date and continuing on each of the following Five (5) successive months thereafter (each
and “Amortization Payment Date”), the Company shall redeem the Amortization Payment due noted in Column IV
(each, an “Amortization Payment”) in accordance with the attached Amortization Schedule (Exhibit A)
on the Amortization Payment Date or if such day is not a Business Day on the next Business day. Any failure to make payment under
the terms herein or in compliance with the Amortization Schedule shall not be deemed an Event of Default (as further detailed
in Section 3 below).

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 1 of 16

    	 

    

 

This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1          Conversion
Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date of this
Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article
III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to
convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares
of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower
into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”)
determined as provided herein (a “Conversion”); 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).
The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion
Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion,
in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in
accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile (or by other means resulting
in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion
date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this
Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s
option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion
Date, provided, however, that the Borrower shall have the right to pay any or all interest in cash plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4)
at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

1.2          Conversion
Price.

 

(a)          Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall initially be equal to $1.00 per share
of Common Stock (the “Fixed Conversion Price”), so long as the Company is not in default (as defined herein) (subject
to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events). Notwithstanding the foregoing, (i) from and after the six month anniversary of the Issue Date
and/or (ii) in the event that the Borrower is in default of the terms under the Note (as further defined in Section 3 below),
the “Conversion Price” shall be amended to equal the lesser of a i) 35% discount from the lowest Trading Price in
the five (5) Trading Days prior to conversion or ii) the Fixed Conversion Price (the “Default Conversion Price”).
“Trading Price” means, for any security as of any date, the lowest trading price on the Over-the-Counter Bulletin
Board, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”)
mutually acceptable to Borrower and Holder (i.e. Bloomberg). If the Trading Price cannot be calculated for such security on such
date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and
the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required
in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock
is traded for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common
Stock is then being traded.

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 2 of 16

    	 

    

 

(b)          Conversion
Price Adjustment. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes
a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower
is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of
the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase
50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause
(i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon
the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the
lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y)
the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion
Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination
Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement
as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the
person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of
the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative. In addition,
if at any time before this Note is prepaid or converted in full, the Company shall issue equity securities or convertible securities
having a purchase price or conversion rate/price, as the case may be, that is less than the Fixed Conversion Price or Default
Conversion Price (a “Subsequent Conversion Price”), then such conversion prices shall be automatically adjusted at
the Holder’s option to such Subsequent Conversion Price.

 

1.3          Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the
Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased
from time to time in accordance with the Borrower’s obligations pursuant to Section 4(g) of the Purchase Agreement. Commencing
on the expiration of the first month from the issue date of this Note, the Reserved Amount shall be recalculated each month based
upon the Variable Conversion Price and the Company shall notify the Transfer Agent and the Holder in writing by the fifth day
of the following month of the new Reserved Amount. In the event the Company does not notify the Transfer Agent of the new Reserved
Amount in a timely manner, the Holder shall have the absolute right to notify the Transfer Agent, without any further action by
the Company. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved Amount, regardless
of any prior conversions. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid
and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which
would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price,
the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this
Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note.

 

If, at any time the Borrower does not maintain
the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 3 of 16

    	 

    

 

1.4          
Method of Conversion.

 

(a)           Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time
to time after the Issue Date, by: (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.

 

(b)           Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder
first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order
of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes)
may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount
stated on the face hereof.

 

(c)          
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)           Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Common Stock issuable upon such conversion within three (3) business days after such receipt (but in any event the fifth
(5th) business day being hereinafter referred to as the “Deadline”) (and, solely in the case of conversion
of the entire unpaid principal amount hereof, surrender of the this Note) in accordance with the terms hereof and the Purchase
Agreement.

 

(e)          
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date. 

 

(f)           Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower’s transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 4 of 16

    	 

    

 

(g)          
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3
above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock; provided, however that such damages shall cease
to accrue upon cancellation of the applicable conversion by Holder in accordance with Section 1.8 hereof. Such cash amount shall
be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by
written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the
principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such
additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees
that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference
with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated
damages provision contained in this Section 1.4(g) are justified.  

 

1.5           Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor
rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the
Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited
Investor (as defined in the Purchase Agreement). Except as otherwise
provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common
Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for
shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement
or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend,
shall bear a legend substantially in the following form, as appropriate:

 

“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.” 

 

The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i)
the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration
under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the
Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration
statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel
provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or
Regulations S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note. 

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 5 of 16

    	 

    

 

1.6           Effect
of Certain Events. 

 

(a)          
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.

 

(b)           Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all
of the Notes, there shall be any merger, consolidation, exchange of shares, reca-pitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of
all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon
the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section
1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least
fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no
such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor
or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions
shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)           Adjustment
Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets)
to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or
distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this
Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets
which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such
Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such
Distribution. 

 

(d)          
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note. 

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 6 of 16

    	 

    

 

1.7           Trading
Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note
and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the
Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded
(the “Maximum Share Amount”), subject to equitable adjustment from time to time for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the
Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or
regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the
Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share
Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the
Note. 

 

1.8           Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower’s failure to convert this Note. 

 

1.9          
Prepayment. Notwithstanding anything to the contrary contained in this Note, so long as the Borrower has not received a
Notice of Conversion from the Holder and so long as the Borrower is not in default pursuant to Section 3 of this Note, then at
any time during the period beginning on the Issue Date and ending on the date that one day prior to the Maturity Date, the Borrower
shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay
the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment
hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered address
and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall
be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the
“Optional Prepayment Date”), the Borrower shall make payment to or upon the order of the Holder as specified by the
Holder in writing to the Borrower. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to
the Holder of an amount in cash. Not withstanding anything to the contrary herein, the Holder may elect to exercise its right
to convert all or any part of this Note at the then applicable Conversion Price during the three (3) Trading Days following receipt
of the Optional Prepayment Notice by delivery during such period of a Conversion Notice. Any such delivery of a Conversion Notice
shall supersede any Optional Prepayment Notice.

 

ARTICLE
II. CERTAIN COVENANTS 

 

2.1           Negative Covenants
As long as at least 50% or more of the Original Principal Amount of this Note remains outstanding, unless the holders of all of
the outstanding Notes shall have otherwise given prior written consent, the Borrower shall not, and shall not permit any of its
subsidiaries (whether or not a subsidiary on the Issue Date) to, directly or indirectly:

 

(a)           other
than indebtedness existing as of the Initial Date, incurred in the ordinary course of business for trade expenses (not borrowed
money) or which indebtedness will repay all amounts due under this Note in full (“Permitted Indebtedness”), enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not
limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom, which indebtedness shall be senior is respect to security to this Note;

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 7 of 16

    	 

    

 

(b)           other than Permitted
Liens (as defined below), enter into, create, incur, assume or suffer to exist any liens, charges or encumbrances of any kind or
nature (“Liens”), on or with respect to any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom. “Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other
governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Borrower) have been established in accordance with GAAP; (b) Liens imposed by law
which were incurred in the ordinary course of the Borrower’s business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Borrower’s
business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the Borrower and its consolidated subsidiaries or (y) are
being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future
the forfeiture or sale of the property or asset subject to such Lien; (c) Liens incurred in connection with Permitted Indebtedness.

 

2.2. Additional Negative
Covenants. As long as any portion of this Note remains outstanding, unless the holders of all of the outstanding Notes shall have
otherwise given prior written consent, the Borrower shall not, and shall not permit any of its subsidiaries (whether or not a subsidiary
on the Issue Date) to, directly or indirectly:

 

(a)           amend its charter documents, including,
without limitation, its Articles of Incorporation and bylaws, in any manner that materially and adversely affects any rights of
the Holder;

 

(b)           repay, repurchase or offer to repay,
repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock equivalents;

 

(c)           pay cash dividends or distributions on any equity
securities of the Borrower;

 

(d)           sell, lease or
otherwise dispose of any portion of its assets outside the ordinary course of business, other than de minimis sales. Any consent
to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition;

 

(e)           so long as the
Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money,
give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors,
employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the
date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of
business or (c) not in excess of $10,000;

 

(f)           enter into any
transaction with any affiliate of the Borrower which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s length basis and expressly approved by a majority of the disinterested directors
of the Borrower (even if less than a quorum otherwise required for board approval); or

 

(g)           enter into any agreement with respect to any
of the foregoing.

 

ARTICLE III. EVENTS OF DEFAULT

 

If any of the following events of default (each, an
“Event of Default”) shall occur: 

 

3.1          
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note (except for Amortization Payments, whether at maturity, upon acceleration or otherwise.

 

EASTSIDE DISTILLING, INC.

SECURED CONVERTIBLE PROMISSORY
NOTE 

Issue Date: September 10, 2015 

 

    	Page 8 of 16

    	 

    

 

                    3.2          Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that
it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with
the terms of this Note by the Deadline, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in
certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to
this Note as and when required by this Note by the Deadline, the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing( electronically or in certificated form) any certificate
for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required
by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion.

 

                    3.3          Breach
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any
collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days
after written notice thereof to the Borrower from the Holder;

 

                    3.4          Breach
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement),
shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have)
a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement;

 

                    3.5          Bankruptcy,
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall commence, or there shall be commenced against the
Borrower or any subsidiary of the Borrower under any applicable bankruptcy or insolvency laws as now or hereafter in effect or
any successor thereto, or the Borrower or any subsidiary of the Borrower commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to the Borrower or any subsidiary of the Borrower or there is commenced against the Borrower
or any subsidiary of the Borrower any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of
61 days; or the Borrower or any subsidiary of the Borrower is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower or any subsidiary of the Borrower suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or the Borrower or any subsidiary of the Borrower makes a general
assignment for the benefit of creditors; or the Borrower or any subsidiary of the Borrower shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Borrower or any subsidiary of the
Borrower shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts;
or the Borrower or any subsidiary of the Borrower shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Borrower or any subsidiary of the
Borrower for the purpose of effecting any of the foregoing;

 

                    3.6          Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $50,000, and shall remain unvaca-ted, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld;

 

                    3.7          Indebtedness
Default. The Borrower or any subsidiary of the Borrower shall default in any of its obligations under any other Note or any
mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may
be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing
or factoring arrangement of the Borrower or any subsidiary of the Borrower in an amount exceeding $50,000, whether such indebtedness
now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable;

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 9 of 16

    	 

    

 

                    3.8          Delisting
of Common Stock; DTC Chill. The Borrower shall fail to maintain the quoting or listing of the Common Stock on at least one
of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York
Stock Exchange, or the American Stock Exchange or there shall be no bid price for the stock for a period of one business day OR
the Depository Trust Company places a chill on new deposits of Common Stock, which is not removed within ten (20) trading days;

 

                    3.9          Failure
to Comply with the Exchange Act. The Borrower shall fail to meet the current public information requirements under Rule 144
(provided that where Borrower files a periodic report within the time period required under Form NT shall not be deemed a default
of this Section 3.9); and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

                    3.10        Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

                    3.11        Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

                    3.12        Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future).

 

                    3.13        Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.

 

                    3.14        Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

 

                    3.15        Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocable reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Holder and the Borrower.

 

                    3.16        Failure
to Pay Post-Closing Expenses. The failure by Borrower to pay any and all Post-Closing Expenses as defined in section 4.6.

 

                    3.17        Delisting.
From and after the initial trading, listing or quotation of the Common Stock on a Principal Market, an event resulting in the Common
Stock no longer being traded, listed or quoted on a Principal Market; failure to comply with the requirements for continued quotation
on a Principal Market; or notification from a Principal Market that the Borrower is not in compliance with the conditions for such
continued quotation and such non-compliance continues for seven (7) trading days following such notification.

 

                    3.18        Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable
notice and cure or grace periods, shall, at the option of the Borrower, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements”
means collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the
Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other
Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted
with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 10 of 16

    	 

    

 

                    3.19        Consecutive
Late Filings. If the Company files a late notification (NT 10-Q or NT 10-K) for any quarterly or annual report for any two
(2) consecutive periods.

 

Upon the occurrence and during the continuation
of any Event of Default the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to the outstanding principal and interest plus the applicable default interest.

 

If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right
at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares),
to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

 

ARTICLE IV. MISCELLANEOUS

 

                    4.1          Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

 

                    4.2          Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

 

If to the Borrower, to:

 

EASTSIDE DISTILLING, INC.

1805 S.E. MARTIN LUTHER KING JR. BLVD.

PORTLAND, OR 97214

Attn: Mr. Steven Earles, CEO

 

If to the Holder:

 

WWOD Holdings, LLC. 

425 East 63rd St. Suite E4K

New York, NY 10065

Attn: Neil Benjamin Rock

 

4.3          Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 11 of 16

    	 

    

 

4.4          Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection
with a bona  fide margin account or other lending arrangement.

 

4.5          Cost
of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

4.6          Post-Closing
Expenses. The Issuer will bear any and all miscellaneous expenses that may arise as a result of this Agreement post-closing.
These expenses include, but are not limited to, the cost of legal opinion production, transfer agent fees, equity issuance fees,
etc. The failure to pay any and all Post-Closing Expenses will be deemed a default as described in Section 2.6.10 herein.

 

4.7          Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The
parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder
waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party
hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in
connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

4.8          Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

4.9          Purchase
Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.10        Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders).
In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including
by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed
sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or
winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower
shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 12 of 16

    	 

    

 

4.11        Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.

 

4.12        Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The
Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive
the Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Borrower
(to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will
suffer and permit the execution of every such as though no such law has been enacted.

 

(Signature Pages Follow)

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 13 of 16

    	 

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this September 10, 2015.

	 	 	 	 
	 	EASTSIDE DISTILLING, INC.	 
	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	 	Steven Earles, CEO, CFO	 

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 14 of 16

    	 

    

 

Exhibit A.

 

NOTICE OF CONVERSION

 

The
undersigned hereby elects to convert $________________ of the principal amount of the Note (defined below) into Shares of Common
Stock of EASTSIDE DISTILLING, INC., a NEVADA Corporation (the “Borrower”) according to the conditions of the
Convertible Note of the Borrower dated as of September __, 2015 (the “Note”). No fee will be charged to the
Holder or Holder’s Custodian for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions: 

	 	 	 
	 	o	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”). 
	 	 	 
	 	 	Name of DTC Prime Broker: _____________________________________________
	 	 	 
	 	 	Account Number: ____________________________________________________
	 	 	 
	 	o	The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below:

	 	 	 
	Date of Conversion:	 	 
	 	 	 
	Conversion Price:	 	 
	 	 	 
	Shares to Be Delivered:	 	 
	 	 	 
	Remaining Principal Balance Due  	 	 
	 	 	 
	After This Conversion:	 	 
	 	 	 
	Signature	 	 
	 	 	 
	 	 	 
	Print Name:	 	 

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 15 of 16

    	 

    

 

Exhibit A. 

 

AMORTIZATION SCHEDULE 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Principal
	Amortization	 	Amortization	 	Amortization	 	Amortization	 	Remaining After
	Payment Date	 	Principal Due	 	Interest Due	 	Payment Due	 	Amortization
	 	 	 	 	 	 	 	 	 
	(Column I)	 	(Column II)	 	(Column III)	 	(Column IV)	 	(Column V)
	 	 	 	 	 	 	 	 	 
	30 Calendar Days after the Issue Date	 	$2,291.67	 	$3,208.33	 	$5,500.00	 	$272,708.33
	60 Calendar Days after the Issue Date	 	$11,791.67	 	$3,208.33	 	$15,000.00	 	$260,916.66
	90 Calendar Days after the Issue Date	 	$31,791.67	 	$3,208.33	 	$35,000.00	 	$229,124.99
	120 Calendar Days after the Issue Date	 	$51,791.67	 	$3,208.33	 	$55,000.00	 	$177,333.32
	150 Calendar Days after the Issue Date	 	$76,791.67	 	$3,208.33	 	$80,000.00	 	$100,541.65
	180 Calendar Days after the Issue Date	 	$100,541.67	 	$3,208.33	 	$103,750.00	 	$00.00
	Total	 	$275,000.00	 	$19,250.00	 	$294,250.00	 	 

 

EASTSIDE DISTILLING, INC. 

SECURED CONVERTIBLE PROMISSORY NOTE 

Issue Date: September 10, 2015 

 

    	Page 16 of 16

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