Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
CEO
Employment Agreement
As
previously announced on June 30, 2020, the Board of Directors of Eastside Distilling, Inc. (the “Company”), appointed
Paul Block as Chief Executive Officer, effective July 1, 2020.
In
connection with Mr. Block’s appointment as Chief Executive Officer, Mr. Block entered into an executive employment agreement
with the Company on July 7, 2020, effective July 1, 2020 (the “Employment Agreement”). Under the Employment Agreement,
Mr. Block will be paid in all stock of 31,250 shares per month from July 1, 2020 through December 31, 2020, which includes a 2020
bonus equal to 50% of his salary during the six-month period. Beginning January 1, 2021, the Company will pay Mr. Block an annual
base salary of $350,000, which will increase to $375,000 on January 1, 2022 if Company revenue exceeds $20 million in 2021, and
increase to $400,000 on January 1, 2023 if Company revenue exceeds $30 million in 2022.
The
Company will also request that the Compensation Committee of the Board of Directors approve the following grants of restricted
stock units (“RSUs”) to Mr. Block: (i) on or after July 1, 2020, the equivalent of $100,000 in RSUs, one-half (1/2)
of which will vest on each of March 31, 2021 and June 30, 2021; (ii) on or after January 1, 2021, the equivalent of $200,000 of
RSUs, one-twelfth (1/12) of which will be earned and vested on each of March 31, June 30, September 30 and December 31, beginning
March 31, 2021 and ending December 31, 2023; (iii) on or after January 1, 2022, the equivalent of $200,000 of RSUs, one-twelfth
(1/12) of which will be earned and vested on each of March 31, June 30, September 30 and December 31, beginning March 31, 2022
and ending December 31, 2024; and (iv) on or after January 1, 2023, the equivalent of $100,000 of RSUs, one-twelfth (1/12) of
which will be earned and vested on each of March 31, June 30, September 30 and December 31, beginning March 31, 2023 and ending
December 31, 2025.
Further,
Mr. Block will be eligible to receive a target incentive payment of 100% of his annual base salary beginning in 2021. 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 of Directors. Mr. Block will also receive other benefits that are
generally available to other executive officers of the Company and 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,
twelve (12) months of the Executive’s then-current annual base salary (which will be deemed $350,000 during 2020) and the
continued vesting of RSUs for a period of 12 months after the date of termination.
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 10.1 and incorporated herein by reference.