Beeline Holdings, Inc 8-K, filed Jun 8, 2020
Beeline Holdings, Inc. (BLNE)
About this 8-K
Beeline Holdings, Inc filed this 8-K on June 8, 2020, reporting on events of June 2, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 2, 2020
EASTSIDE DISTILLING, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 001-38182 | 20-3937596 | ||
| (State
or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS
Employer Identification No.) |
1001 SE Water Avenue, Suite 390
Portland, OR 97214
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (971) 888-4264
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Common Stock, $0.0001 par value | EAST | The Nasdaq Stock Market LLC | ||
| (Title of Each Class) | (Trading Symbol) | (Name of Each Exchange on Which Registered) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (CFR §240.12b-2 of this chapter). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01 Entry into a Material Definitive Agreement.
On June 5, 2020, Eastside Distilling, Inc. (the “Company”), Intersect Beverage, LLC, Stephanie Kilkenny, Patrick J. Kilkenny and Robert Grammen (the “Intersect Parties”) entered into a letter agreement (the “Letter Agreement”). Pursuant to the terms of the Letter Agreement, the Intersect Parties agreed to waive the requirements set forth in the General Mutual Release, dated effective as of April 24, 2020 (“Mutual Release”), that the Company nominate Geoffrey Gwin for election at Eastside’s 2020 Annual Meeting of Stockholders, and the Company cause Geoffrey Gwin to be submitted to the shareholders for election. The Intersect Parties instead agreed that Robert Grammen be nominated for election in place of Geoffrey Gwin.
The foregoing summary of the Letter Agreement is qualified in its entirety by the full text of the Letter Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Election of Director
On June 2, 2020, the board of directors of the Company (the “Board”) appointed Robert Grammen to the Board, effective June 15, 2020, to serve until the Company’s 2020 Annual Meeting of Stockholders or until his respective successor is duly elected and qualified or until his earlier death, resignation or removal, whichever first occurs. Mr. Grammen has been appointed to the Board’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, effective upon joining the Board.
Mr. Grammen currently serves as a managing director of EFO Management, LLC, a family investment office, where he is responsible for the origination, analysis, structure and execution of direct debt and equity investments, across a wide range of asset classes that includes IT, healthcare, hospitality, spirits and real estate. Prior to joining EFO Management, LLC in 1999, Mr. Grammen served as a vice president of International Trading Group, focusing on the purchase, restructure and sale of distressed municipal bond debt. Mr. Grammen received his Bachelor of Arts in Economics from Bethany College, Bethany, West Virginia.
Mr. Grammen was a consultant for Intersect Beverage, LLC, a California limited liability company (“Intersect”) prior to the Company entering into the previously announced Asset Purchase Agreement, dated September 12, 2019, (the “Asset Purchase Agreement”), between the Company and Intersect, pursuant to which the Company acquired substantially all of the assets of Intersect, an importer and distributor of tequila and related products (the “Transaction”) under the brand name “Azuñia.”
Mr. Grammen maintains a 1.22% interest in Intersect Beverage, LLC and, pursuant to the Asset Purchase Agreement described below, is entitled to a pro-rata portion of the number of shares of common stock of the Company, cash payments and/or promissory notes comprising (i) 1,200,000 shares of the Company’s common stock and, (ii) to the extent certain revenue targets are achieved, the Initial Earnout Consideration (as defined below) and the Subsequent Earnout Consideration (as defined below).
The Fixed Number of Shares will be issued 540 days following the closing date of the Transaction as follows: 850,000 shares of the Company’s common stock will be issued at a stipulated value of $6.00 per share, equivalent to $5,100,000, and the remaining 350,000 shares of the Company’s common stock will be issued at a stipulated value equal to the 20-day volume-weighted average closing price of Company common stock on September 12, 2020. In addition, upon the acquired business (which is comprised of Intersect’s business of importing and distributing tequila and related products (the “Business”)) achieving gross revenues of $3.24 million or more during the first eighteen months following closing date of the Agreement, the Company will issue as further consideration (the “Initial Earnout Consideration”) additional shares of Company common stock at a price per share equal to the 20-day volume-weighted average closing price of the Company’s common stock on the eighteen-month anniversary of the closing date of the Transaction. The number of additional shares of the Company’s common stock to be issued will be based upon a multiple of gross revenue of the Business, ranging from 3.30 to 3.50, and less the aggregate stipulated dollar value of the Fixed Number of Shares previously paid.
If the gross revenue of the acquired Business for the period commencing on the first day of the thirteenth month following the closing date of the Transaction and ending on the last day of the twenty-fourth month following the closing date of the Transaction (the “Subsequent Earnout Period”) equals or exceeds $9.45 million, the Company will pay to the members of Intersect, including 1.22% to Mr. Grammen, $1,500,000, either in cash or a number of shares equal to (x) $1.5 million divided by (y) the 20-day volume-weighted average closing price of the Company’s common stock on the last day of the Subsequent Earnout Period, rounded down to the nearest whole number of shares of the Company’s common stock (the “Subsequent Earnout Consideration”).
Notwithstanding anything set forth in the Asset Purchase Agreement, the Company will not be required to issue shares of common stock if, in order for the Company to issue sufficient shares to pay any portion of the aggregate consideration under the Agreement, the Company would be required to hold a vote of the Company’s stockholders pursuant to Nasdaq Listing Rules. In the event that the Company would be required to hold a vote of the Company’s stockholders pursuant to Nasdaq Listing Rules, the Company may, at its election, issue only that number of shares of common stock which does not require such vote, and instead pay any remaining portion of the aggregate consideration in the form of cash or as a promissory note with a three-year maturity that bears interest at a rate of 6% per annum.
Mr. Grammen will participate in the Company’s annual compensation program for directors, as described in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2020.
The information set forth above under Item 1.01 regarding the Letter Agreement is hereby incorporated by reference into this Item 5.02.
Departure of Director
On June 2, 2020, Geoffrey Gwin tendered his resignation from the Board, effective June 15, 2020.
Appointment of CFO
On June 2, 2020, the Board approved the appointment of Geoffrey Gwin as Chief Financial Officer, effective June 15, 2020.
Mr. Gwin, age 53, joined our Board of Directors on August 27, 2019 and tendered his resignation from the Board of Directors on June 2, 2020, effective June 15, 2020. Mr. Gwin is a Board Observer of SMArtX Advisory Solutions, Inc., a private company offering technology solutions to wealth advisors, RIA’s and other financial services firms. Mr. Gwin formed Group G Capital Partners, LLC in 2003 and managed its related strategies as its Chief Investment Officer up through May 2020. Mr. Gwin was a Managing Member of Group G Capital Partners, and has held positions at Symphony Asset Management, BHF-BANK Aktiengesellschaft, and Citibank, Inc. over the last two decades. Mr. Gwin holds a Bachelor of Science in Business from Wake Forest University and is a Charter Financial Analyst.
Compensatory Arrangements of Certain Officers
In connection with Mr. Gwin’s appointment as Chief Financial Officer, Mr. Gwin entered into an Executive Employment Agreement with Eastside effective June 15, 2020 (the “Employment Agreement”). The agreement terminates on June 15, 2021. Under the Employment Agreement, Mr. Gwin will initially receive an annual base salary of $250,000, with $100,000 in cash and $150,000 in RSUs. Twenty-five percent (25%) of the award will vest on each of March 31, June 30 and September 30 and December 31 of each year this contract is in effect, beginning September 30, 2020. Mr. Gwin will also be eligible to receive a target incentive payment of 100% of his annual base salary beginning in 2020, paid 50% in RSUs and 50% in cash. Actual payments will be determined based on a combination of the Company’s results and individual performance against the applicable performance goals established by the Compensation Committee of the Board. Mr. Gwin will also receive (i) a signing bonus of $35,000, 50% in cash and 50% in fully vested stock of the Company, and (ii) other benefits that are generally available to other executive officers of the Company. Mr. Gwin will be entitled to certain severance benefits if he is terminated without cause, or resigns for good reason (in each case, as defined in the Employment Agreement), including, among other things, the remainder of the annual base salary remaining under the employment term and one year of continued vesting of RSUs.
The foregoing is a summary only and does not purport to be a complete description of all of the terms, provisions, covenants and agreements contained in the Employment Agreement and is subject to and qualified in its entirety by reference to the complete text of the Employment Agreement, which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Resignation of Interim CFO
On June 2, 2020, G. Stuart Schreiner agreed to resign as Interim Chief Financial Officer of the Company, effective June 15, 2020.
Eastside’s press release announcing Mr. Grammen’s appointment to the Board, Mr. Gwin’s resignation from the Board and appointment as Chief Financial Officer, and Mr. Schreiner’s resignation as Interim Chief Financial Officer is furnished hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 8, 2020
| EASTSIDE DISTILLING, INC. | ||
| By: | /s/ Lawrence Firestone | |
| Lawrence Firestone | ||
| Chief Executive Officer | ||
Exhibit 10.1
INTERSECT BEVERAGE, LLC
June 5, 2020
Eastside Distilling
1001 SE Water Ave
Suite 390
Portland OR 97214
| Re: | General Mutual Release dated effective as of April 24, 2020 (“Mutual Release”), by and among Intersect Beverage, LLC, a California limited liability company, and its principals Patrick J. Kilkenny and Stephanie Kilkenny, and Robert Grammen (collectively, “Intersect”), and Eastside Distilling, Inc., a Nevada corporation (the “Company”), and Paul Shoen, Jack Peterson, and Lawrence Firestone (collectively, “Eastside”). |
To Whom it May Concern:
Eastside agreed in the Mutual Release to nominate Geoffrey Gwin for election at Eastside’s 2020 Annual Meeting of Stockholders, and to cause Geoffrey Gwin to be submitted to the shareholders for election. Intersect hereby waives that requirement and instead agrees that Robert Grammen be nominated for election in place of Geoffrey Gwin.
Intersect and the Company acknowledge and agree that all other terms of the Mutual Release continue to be enforceable, and further that references to the Asset Purchase Agreement in the Mutual Release were intended to and do include the Transaction Documents referred to in the Asset Purchase Agreement.
The Parties to this letter agreement represent and warrant that they have the power and authority to enter into this letter agreement.
| Intersect Beverage, LLC | ||
| By: | /s/ Patrick J. Kilkenny | |
| Name: Patrick J. Kilkenny | ||
| Its: Manager | ||
| Patrick J. Kilkenny | ||
| /s/ Patrick J. Kilkenny | ||
| Patrick J. Kilkenny | ||
| Stephanie Kilkenny | ||
| /s/ Stephanie Kilkenny | ||
| Stephanie Kilkenny | ||
| Robert Grammen | ||
| /s/ Robert Grammen | ||
| Robert Grammen | ||
| Acknowledged and agreed: | ||
| Eastside Distilling, Inc. | ||
| By: | /s/ Lawrence Firestone | |
| Name: Lawrence Firestone | ||
| Its: Chief Executive Officer | ||
Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “Agreement”) is entered into as of June 5, 2020, by and between Eastside Distilling, Inc., a Nevada corporation (the “Company”), and Geoffrey Gwin (“Executive”) (collectively, the “Parties”), and is to be effective as of June 15, 2020 (the “Effective Date”). This Agreement shall replace any prior agreement between the Company and Executive existing prior to the Effective Date.
1. Duties and Scope of Employment.
(a) Positions and Duties. Executive will serve as Chief Financial Officer (“CFO”) of the Company as of the Effective Date. Executive will render such business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to him by the Company’s Chief Executive Officer (the “CEO”), to whom he shall report.
(b) Term. This Agreement will commence on the Effective Date and terminate on the first anniversary of the Effective Date, unless earlier terminated in accordance with this Agreement (the “Employment Term”).
(c) Obligations. Executive will devote Executive’s full business efforts and time to the Company and will use good faith efforts to discharge Executive’s obligations under this Agreement to the best of Executive’s ability and in accordance with each of the Company’s corporate guidance and ethics guidelines, conflict of interest policies and code of conduct as may be in effect from time to time. Notwithstanding the foregoing, nothing in this letter shall preclude Executive from devoting reasonable periods of time to charitable and community activities, managing personal investment or business assets and, subject to approval of the Board which will not be unreasonably withheld, serving on boards of other companies (public or private) not in competition with the Company, provided that none of these activities interferes with the performance of Executive’s duties hereunder or creates a conflict of interest.
(d) Work Location. Executive’s principal place of employment shall be both at a remote location and at the Company’s corporate headquarters in Portland, Oregon, subject to business travel as needed to properly fulfill Executive’s employment duties and responsibilities. The Company acknowledges and agrees that Executive’s principal place of residence may be outside of the State of Oregon.
2. Compensation.
(a) Base Salary. As of the Effective Date, the Company will pay Executive an annual base salary of $100,000 as compensation for Executive’s services, subject to review from time to time by the Compensation Committee of the Board (the “Compensation Committee”) (such annual salary, as is then effective, to be referred to herein as “Base Salary”). All compensation paid to Executive will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings.
(b) RSU Grant. On or promptly after the Effective Date, the Company will grant the Executive the equivalent of $150,000 of restricted stock units (“RSUs”), based on the Company’s customary determination of the applicable stock price at the time of grant. Twenty-five percent (25%) of the award will be earned and vested on each of March 31, June 30 and September 30, and December 31 of each year this contract is in effect, beginning September 30, 2020. The award will be subject to the terms and conditions of the Company’s 2016 Equity Incentive Plan and an award agreement (collectively, the “Equity Documents”). Notwithstanding the foregoing, Executive shall not be entitled to any form of equity award unless and until the Compensation Committee or the Board grants Executive the equity award and Executive executes and delivers all applicable award agreements regarding the same.
(c) Annual Bonus. Executive will be eligible to participate in the Company’s bonus plan, beginning in 2020. Executive’s target bonus shall be 100% of Base Salary and RSU Grant which is the combined total base salary. The bonus will be paid 50% in RSUs and 50% in cash. Actual payments will be determined based on a combination of Company results and individual performance against the applicable performance goals established by the Compensation Committee.
| 1 |
(d) Option/Equity Grant. Executive will be eligible to participate in the Company’s equity plan program applicable to executives of the Company. The award will be subject to the terms and conditions of the Equity Documents. Notwithstanding the foregoing, Executive shall not be entitled to any form of equity award unless and until the Compensation Committee or the Board grants Executive the equity award and Executive executes and delivers all applicable award agreements regarding the same.
(e) Signing Bonus. Executive will be paid a $35,000 signing bonus, 50% of the bonus in cash, and the remainder will be paid in fully-vested stock of the Company no later than December 31, 2020.
3. Employee Benefits and Perquisites. Executive will be eligible to participate in the employee benefit plans and programs generally available to the Company’s senior executives, subject to the terms and conditions of such plans and programs. Executive will be entitled to other benefits and perquisites that are made available to other senior executives of the Company, each in accordance with and subject to the eligibility and other provisions of such plans and programs. The Company reserves the right to amend, modify or terminate any of its benefit plans or programs at any time and for any reason.
4. Expenses. The Company will reimburse Executive for reasonable expenses incurred by Executive in the furtherance of the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
5. Termination of Employment. Notwithstanding anything else in this Agreement to the contract, either the Company or Executive may terminate Executive’s employment and this Agreement at any time with or without cause. If Executive’s employment with the Company terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to the effective date of termination; (b) pay for accrued but unused vacation, if Company policy is to accrue vacation; (c) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive; and (d) unreimbursed business expenses required to be reimbursed to Executive.
6. Severance and Acceleration.
(a) Termination by the Company Without Cause. If (i) Executive’s employment is terminated by the Company without Cause (as defined below) during the Employment Term or within 12 months following a Change of Control (as defined in the Company’s 2016 Equity Incentive Plan) if a Change of Control occurs within the Employment Term or (ii) Executive terminates for Good Reason (as defined below), then, subject to Section 7, Executive will receive, in addition to the compensation set forth in Section 5, (x) payment of the Executive’s Base Salary remaining under the Employment Term (which will in no event be more than 12 months), (y) continued vesting of the RSUs referred to in Section 2(b) over the period specified in that section. The Base Salary payment will be paid out over the period in accordance with the Company’s regular payroll practices. Except to the extent timing of payments are modified by the 409A provision provided in Section 8 below.
(b) Definition of Cause. For purposes of this Agreement, “Cause” will mean:
(i) Executive’s continued failure to perform the duties and responsibilities of Executive’s position after there has been delivered to Executive a written demand for performance from the Board which describes the basis for the Board’s belief that Executive has continued to fail to perform Executive’s duties and provides Executive with thirty (30) days to take corrective action;
(ii) Any act of personal dishonesty taken by Executive in connection with Executive’s responsibilities as an employee of the Company with the intention or reasonable expectation that such action will result in the personal enrichment of Executive;
(iii) Executive’s conviction of, or plea of nolo contendere to, a felony;
| 2 |
(iv) Executive’s commission of any tortious act, unlawful act, malfeasance or violation of Company policies (such as workplace harassment or insider trading policy) which causes or reasonably could cause (for example, if it became publicly known) in the sole and good faith judgement of the Board material harm to the Company’s standing, condition or reputation;
(v) Any material breach by Executive of the Company’s standard form of Confidentiality and Proprietary Rights Agreement, in substantially the form attached hereto as Exhibit A (such agreement, the “Confidentiality Agreement”) or any other improper disclosure by Executive of the Company’s confidential or proprietary information;
(vi) A breach of any fiduciary duty owed to the Company by Executive;
(vii) The existence of “Cause” under the Company’s 2016 Equity Incentive Plan; or
(viii) Executive (A) obstructing or impeding; (B) endeavoring to influence, obstruct or impede; or (C) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, Executive’s failure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with an Investigation will not constitute “Cause.”
(c) Definition of Good Reason. For purposes of this Agreement, “Good Reason” will mean the termination of Executive’s employment with the Company by Executive after the occurrence of one or more of the following events without Executive’s express written consent
(i) a material reduction of Executive’s duties, authorities, or responsibilities relative to Executive’s duties, authorities, or responsibilities in effect immediately prior to the reduction; provided, however, that continued employment following a Change in Control with substantially the same duties, authorities, or responsibilities with respect to the Company’s business and operations will not constitute “Good Reason” (for example, “Good Reason” does not exist if Executive is employed by the Company or a successor with substantially the same duties, authorities, or responsibilities with respect to the Company’s business that Executive had immediately prior to the Change in Control regardless of whether Executive’s title is revised to reflect Executive’s placement within the overall corporate hierarchy or whether Executive provides services to a subsidiary, affiliate, business unit or otherwise);
(ii) a material reduction by the Company in Executive’s annual total target cash compensation; provided, however, that, a reduction of annual total target cash compensation that also applies to substantially all other similarly situated employees of the Company members will not constitute “Good Reason”; or
(iii) failure of a successor corporation to assume the obligations under this Agreement.
In order for the termination of Executive’s employment with the Company to be for Good Reason, Executive must not terminate employment without first providing written notice to the Company of the acts or omissions constituting the grounds for “Good Reason” within 30 days of the initial existence of the grounds for “Good Reason” and a cure period of 30 days following the date of written notice (the “Cure Period”), the grounds must not have been cured during that time, and Executive must terminate Executive’s employment within 30 days following the Cure Period.
(d) Voluntary Termination or Termination for Cause. If Executive’s employment is terminated voluntarily or due to death or disability or is terminated for Cause by the Company, then except as set forth in Section 5, all payments of compensation by the Company to Executive hereunder will terminate immediately.
| 3 |
7. Conditions to Receipt of Severance and Acceleration.
(a) Separation Agreement and Release of Claims. The receipt of any severance or other benefits pursuant to Section 6 will be subject to Executive signing and not revoking a separation agreement and release of claims in form and substance reasonably acceptable to the Company in its discretion that becomes effective no later than sixty (60) days following Executive’s employment termination date (such date, the “Release Deadline”). If the release does not become effective by the Release Deadline, Executive will forfeit any rights to severance under this Agreement. In no event will severance payments be paid or provided until the Release Deadline. Any payments delayed from the date Executive terminates employment through the Release Deadline will be payable in a lump sum without interest on the Release Deadline and all other amounts will be payable in accordance with the payment schedule applicable to each payment or benefit. In the event the termination occurs at a time during the calendar year where the release could become effective in the calendar year following the calendar year in which Executive’s termination occurs, then any severance payments under this letter that would be considered Deferred Compensation Separation Benefits (as defined below) will be paid on the first payroll date to occur during the calendar year following the calendar year in which such termination occurs, or, if later, (i) the Release Deadline, (ii) such time as required by the payment schedule provided above that is applicable to each payment or benefit, or (iii) the Delayed Initial Payment Date (as defined below).
(b) Other Requirements. Executive’s receipt and retention of severance payments will be subject to Executive executing and continuing to comply with the terms of the Confidentiality Agreement.
8. Section 409A.
(a) Notwithstanding anything to the contrary in this Agreement, no severance pay or benefits payable upon separation that is payable to Executive, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation (together, the “Deferred Compensation Separation Benefits”) under Section 409A of the Internal Revenue Code (the “Code”) and the final regulations and official guidance thereunder (“Section 409A”), will be payable until Executive has a “separation from service” within the meaning of Section 409A.
(b) Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A, any Deferred Compensation Separation Benefits that are payable within the first six (6) months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service (the “Delayed Initial Payment Date”). All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following Executive’s termination of employment but prior to the six (6) month anniversary of Executive’s termination of employment, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
(c) Any amount paid under the Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Compensation Separation Benefits for purposes of this Agreement. Any amount paid under the Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit will not constitute Deferred Compensation Separation Benefits for purposes of this Agreement. For this purpose, “Section 409A Limit” means the lesser of two (2) times: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during Executive’s taxable year preceding Executive’s taxable year of Executive’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s employment is terminated.
| 4 |
(d) The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. Executive and the Company agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.
9. Representations. By executing this Agreement, Executive represents that Executive is able to accept this role and carry out the work that it would involve.
10. Confidential Information. Executive reaffirms that any confidentiality agreement executed by Executive in favor of the Company remains in full force and effect in accordance with its terms.
11. Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death, and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation, or other business entity which at any time, whether by purchase, merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance, or other disposition of Executive’s right to compensation or other benefits will be null and void.
12. Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally or by electronic mail; (b) one (1) day after being sent overnight by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:
If to the Company:
Eastside Distilling, Inc.
1001 SE Water Ave, suite 390
Portland,
OR 97214
Attn: Chief Executive Officer
If to Executive, at the address set forth on the signature page hereto.
13. Severability. If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provision.
14. Arbitration. The Parties agree that any dispute or controversy arising out of, relating to, or concerning the interpretation, construction, performance, or breach of this Agreement will be settled by arbitration to be held in Multnomah County, Oregon, in accordance with the terms and conditions of the Confidentiality Agreement, unless prohibited by law.
15. Integration. This Agreement, together with the Confidentiality Agreement, and the Equity Documents referenced herein, represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in a writing and signed by duly authorized representatives of the parties hereto. In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understanding that is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement, the terms in this Agreement will prevail.
| 5 |
16. Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.
17. Headings. All captions and Section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
18. Tax Withholding; Clawback. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes. Any amounts payable hereunder are subject to any policy (whether currently in existence or later adopted) established by the Company providing for clawback or recovery of amounts that were paid to Executive. The Company will make any determination for clawback or recovery in its sole discretion and in accordance with any applicable law or regulation.
19. Governing Law. This Agreement and any disputes or claims arising hereunder will be construed in accordance with, governed by and enforced under the laws of the State of Oregon without regard for any rules of conflicts of law. Executive expressly consents to the personal jurisdiction of the state and federal courts located in Multnomah County, Oregon for any lawsuit filed there against him by the Company arising from or relating to this Agreement.
20. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.
21. Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
| 6 |
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a duly authorized officer, effective as of the Effective Date.
| COMPANY: | |
| EASTSIDE DISTILLING, INC. | |
| /s/ Lawrence Firestone | |
| Lawrence Firestone, Chief Executive Officer | |
| 1001 SE Water Ave., Suite 390 | |
| Portland, OR 97214 | |
| EXECUTIVE: | |
| /s/ Geoffrey Gwin | |
| Geoffrey Gwin | |
| Address: 238 Black Rock Tpk, Redding CT 06896 | |
| 7 |
EXHIBIT A
This NONDISCLOSURE AGREEMENT is made as of the date set forth above between:
Eastside Distilling, Inc., (the “Company”) having an office at 1001 SE Water Street, Suite 390, Portland, OR 97214.
And;
Geoffrey Gwin (“Employee”).
1. Purpose. The Company and the Employee are about to begin or have begun an employment relationship in connection with which each party may disclose its Confidential Information to the other.
2. Definition of Confidential Information. “Confidential Information” means any information, technical data, or know-how, including, but not limited to, that which relates to research, acquisitions, product plans, products, services, customers, consultants, markets, processes, designs, drawings, marketing or finances of the Company. The term “Confidential Information” includes trade secrets and to any and all information of any nature or kind whatsoever which relates to all proprietary and financial information relating to the Company’s business; to any and all information concerning the Company’s customers; and to the content of any and all working papers, discussion papers, business plans, documents and products of any nature or kind which the Company has created, amended or enhanced. Confidential Information does not include information, technical data or know-how which (a) is in the possession of the Employee at the time of disclosure as shown by the Employee’s files and records immediately prior to the time of disclosure; (b) the Employee can prove, from contemporaneous written evidence, has been independently developed by its personnel without access to, either directly or indirectly, the Company’s Confidential Information; (c) prior to or after the time of disclosure becomes part of the public knowledge or literature other than as a result of any improper inaction or action of the Employee; (d) is approved in writing by the Company for release; or (e) is required to be disclosed by applicable law or proper legal, governmental or other competent authority (provided that the Company shall be notified sufficiently in advance of such requirement so that it may seek a protective order (or equivalent) with respect to such disclosure, with which the Employee shall fully comply).
3. Nondisclosure of Confidential Information. Employee (a) recognizes that the business and financial records, customer and client lists, proprietary knowledge or data, intellectual property, trade secrets and confidential methods of operations of the Company, its subsidiaries and its Affiliates and their respective successors, assigns and nominees, as they may exist from time to time and which relate to the then conducted or planned business of the Company, its subsidiaries and its Affiliates or of entities with which the Company was or is expected to be affiliated during such periods, are valuable, special and unique assets of the Company, access to and knowledge of which are essential to Employee’s performance with the Company; and (b) shall not, during or after the Term, disclose any of such records, lists, knowledge, data, property, secrets, methods or information to any Person for any reason or purpose whatsoever (except for disclosures (x) compelled by law; provided that Employee promptly notifies the Company of any request for such information before disclosing the same, if practical, and (y) made as necessary in connection with the performance of his duties with the Company) or make use of any such property for his own purposes or for the benefit of any Person except the Company. Employee acknowledges that a breach of this Section 3 may cause irreparable injury to the Company for which monetary damages are inadequate, difficult to compute, or both. Accordingly, Employee agrees that the provisions of this Section 3 may be enforced by specific performance or other injunctive relief.
4. Non-solicitation. Employee acknowledges that the Company, its subsidiaries and its Affiliates have expended and shall continue to expend substantial amounts of time, money and effort to develop business strategies, employee, client and customer relationships and goodwill to build an effective organization. Employee acknowledges that Employee is and shall become familiar with the confidential information of the Company, its subsidiaries and its Affiliates, including trade secrets, and that Employee’s services are of special, unique and extraordinary value to the Company. Employee acknowledges that the opportunities of employment and compensation offered by the Company are adequate consideration for the covenants contained in this Section 4. Employee acknowledges that the Company and each of its subsidiaries and Affiliates and their respective successors, assigns and nominees, has a legitimate business interest and right in protecting its confidential information, business, strategies, employee, client and customer relationships and goodwill, and that each of the Company, its subsidiaries and Affiliates and their respective successors, assigns and nominees would be seriously damaged by the disclosure of confidential information and the loss or deterioration of its business strategies, employee and customer relationships and goodwill.
| 8 |
5. Return of Materials. All materials or documents containing or embodying Confidential Information shall remain the property of the Company, and any such materials or documents will be promptly returned to the Company by the Employee, accompanied by all copies of such documentation, within 10 days after (a) the employment relationship has been terminated, or (b) the delivery of written request on the part of the Company.
6. Term. This Agreement shall apply to disclosures of Confidential Information made on or before the signing of this Agreement (including, for the avoidance of doubt, disclosures of Confidential Information made before the date of this Agreement). This Agreement shall remain in effect during Employee’s employment term and shall survive two years from the date Employee ceases to be an employee of the Company.
7. Governing law. This Agreement shall be governed by and shall be construed in accordance with the laws of the State of Oregon, without giving effect to the conflicts of laws principles thereof, to the exclusion of the law of any other jurisdiction.
8. Remedies. Employee agrees that its obligations provided in this Agreement are necessary and reasonable in order to protect the Company and its business, and each Party expressly agrees that monetary damages would be inadequate to compensate the Discloser for any breach by the Recipient of its covenants and agreements set forth in this Agreement. Accordingly, Employee agrees and acknowledges that any such violation or threatened violation will cause irreparable injury to the Company and that, in addition to any other remedies that may be available, in law, in equity or otherwise, the Discloser shall be entitled to obtain both mandatory and prohibitory injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by the Recipient, without the necessity of proving actual damages.
| 9 |
Exhibit 99.1
Eastside Distilling Announces Appointment of Robert Grammen to Board of Directors and Geoffrey Gwin as Chief Financial Officer
PORTLAND, Ore., June 8, 2020—Eastside Distilling, Inc. (NASDAQ: EAST) today announced the appointment of Robert P. Grammen as independent director to the Company’s board of directors, effective June 15, 2020. Geoffrey Gwin will step down from his role as a member of the Company’s board commensurate with the appointment of Mr. Grammen and will be appointed Eastside’s Chief Financial Officer effective June 15, 2020.
Paul Block, Chairman of the board of Eastside Distilling, commented, “We are pleased to welcome Bob Grammen to the Eastside Distilling board of directors. Bob was part of the board of directors at Intersect Beverage, owners of the Azuñia Tequila product lineup, prior to Eastside’s acquisition of the brand in September 2019. He has a strong understanding of both the capital markets and consumer products, which we believe will benefit Eastside into the future.”
Robert P. Grammen is a Managing Director of EFO Management, LLC (“EFO”), a family office located in Dallas, Texas and Naples, Florida that manages in excess of $250 million of direct debt and equity investments across a wide spectrum of asset classes that include IT, Healthcare, Hospitality, Spirits, Real Estate and Asset Based Lending. Grammen serves as the Managing Director of EFO’s Naples, Florida office and is responsible for the origination, analysis, structure and execution of direct debt and equity investments. His post-investment responsibilities have included asset management, committee leadership and board positions for EFO Financial Group, Intersect Beverage, Laser Spine Institute, Palm Beach Tan, Marodyne Medical, Cypress Lending Group, YourCause, Coral Hospitality, Melbourne Greyhound Park and others. Prior to joining EFO in 1999, Grammen served as a Vice President of International Trading Group in Naples, Florida, focusing on the purchase, restructure, and sale of distressed municipal bond debt. From 1987 until 1991, Grammen served as a Vice President of Landbase, Inc. as an investment banker and consultant in the international resort development business, where he worked internationally in 13 countries. Grammen received his B.A. in Economics from Bethany College, Bethany, West Virginia.
Lawrence Firestone, CEO and Board Member of Eastside Distilling, commented, “I am excited to have Geoff join the Company as our full-time Chief Financial Officer. Since joining the board last year, and with his appointment as Audit Committee Chair, Geoff has demonstrated a strong understanding of the financial operations of the business. I look forward to working closely with Geoff to continue the repositioning of Eastside Distilling to focus on our major brands and continuing to improve our financial performance.”
“We want to express our sincere thanks to Stu Schreiner for stepping in as Interim CFO over the past few months. His leadership and steady hand have helped us improve our financial reporting, controls and navigate this unprecedented time in history due to the global disruptions from COVID-19. I look forward to Stu’s support during the transition,” Firestone concluded.
Geoffrey Gwin joined the Eastside board of directors in August 2019. Until March 2020, Gwin was most recently a Member of Quad Capital Management Advisors, LLC and the Managing Member of Group G Capital Partners, LLC. Gwin is a Board Observer of SMArtX Advisory Solutions, Inc., a private company offering technology solutions to wealth advisors, RIA’s and other financial services firms. Gwin formed Group G Capital Partners, LLC in 2003 and had continuously managed its related strategies as its Chief Investment Officer. Gwin has held positions at Symphony Asset Management, BHF-BANK Aktiengesellschaft, and Citibank, Inc. over the last two decades. Gwin holds a Bachelor of Science in Business from Wake Forest University and is a Charter Financial Analyst.
G. Stuart Schreiner, who was the Company’s Interim Chief Financial Officer, will remain a consultant to the Company to assist with the transition to Mr. Gwin as Chief Financial Officer on June 15, 2020.
About Eastside Distilling
Eastside Distilling, Inc. (NASDAQ: EAST) has been producing high-quality, award-winning craft spirits in Portland, Oregon, since 2008. The Company is distinguished by its highly decorated product lineup that includes Redneck Riviera and companion brand Granny Rich Whiskey, newly acquired Azuñia Tequilas, Burnside Whiskeys, Hue-Hue Coffee Rum, and Portland Potato Vodkas. All Eastside spirits are crafted from natural ingredients for quality and taste. Eastside’s Craft Canning + Bottling subsidiary is one of the Northwest’s leading independent spirit bottlers and ready-to-drink canners. For more information visit: www.eastsidedistilling.com or follow the company on Twitter and Facebook.
Important Cautions Regarding Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company’s products in the market; the Company’s success in obtaining new customers; the Company’s success in product development; the Company’s ability to execute its business model and strategic plans; the Company’s success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the financial statements and related information contained in the Company’s Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release may include statements related to our strategic focus, product verticals, anticipated revenue, and profitability. The Company assumes no obligation to update the cautionary information in this release.
Company Contact:
Eastside Distilling
971-888-4264
inquiries@eastsidedistilling.com
Investors:
Robert Blum
Lytham Partners, LLC
(602) 889-9700
east@lythampartners.com