Document:

Exhibit 10.13

  

EMPLOYMENT AGREEMENT

 

BETWEEN

 

GLYECO, INC.

 

And

 

GRANT
SAHAG

(Executive)

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”), dated as of February 12, 2016 (the “Effective Date”) is entered into by and between
GlyEco, Inc., a Nevada corporation (the “Company”), and Grant Sahag, an individual with a physical address at [See
Recent Address on File with Company] (the “Executive”) (collectively, the “Parties,” individually, a “Party”).

WITNESSETH:

 

WHEREAS, the Board of
Directors of the Company (the “Board”) has requested and the Executive has agreed to provide services to the Company
as President of the Company; and

 

WHEREAS, the Board has
determined that it is in the best interests of the Company and its stockholders to indemnify the Executive for claims for damages
arising out of or relating to the performance of such services to the Company in accordance with the terms and conditions set forth
in this Agreement and pursuant to Nevada law; and

 

WHEREAS, as an inducement
to serve and in consideration for such services, the Company has agreed to indemnify the Executive for claims for damages arising
out of or relating to the performance of such services to the Company in accordance with the terms and conditions set forth in
a separate agreement, which indemnification agreement is attached as an exhibit hereto and is incorporated herein by reference;
and

 

WHEREAS, in order to
accomplish these objectives and establish the rights, duties and obligations of the Parties, which shall be generally stated herein
and which may be more fully stated in other agreements between the Parties, including equity-based agreements, indemnity agreements,
and other employment or incentive related agreements as the Company or the Board may adopt from time to time, the Board has caused
the Company to enter into this Agreement;

 

NOW, THEREFORE, in consideration
of the premises and the mutual covenants and agreements set forth herein, the Parties, intending to be legally bound, hereby agree
as follows:

 

     

     

    

 

Article
One

Definitions

 

1.            Definitions.
As used in this Agreement:

 

1.1           The
term “Accrued Obligations,” when used in the case of the Executive’s death or disability shall mean the sum of
(1) that portion of the Executive’s Base Salary that was not previously paid to the Executive from the last payment date
through the Date of Termination and (2) any other Benefit due.

 

1.2           The
term “Automatic Extension” shall have the meaning set forth in Section 2.2 herein.

 

1.3           The
term “Base Salary” shall have the meaning set forth in Section 3.1 herein.

 

1.4           The
term “Board” shall have the meaning set forth in the recitals.

 

1.5           The
term “Cause” shall have the meaning set forth in Section 4.3 herein.

 

1.6           The
term “Common Stock” shall mean the Common Stock, par value $0.0001, of the Company.

 

1.7           The
term “Compensation Committee” shall mean the Compensation Committee of the Company.

 

1.8           The
term “Company Group” shall mean the Company and any other corporation or trade or business required to be aggregated
with the Company which constitutes a single Company under Code Section 414(b) or Code Section 414(c) with the Company, except that
in applying Code Section 1563(a)(1), (2), and (3), the language “at least 50 percent” is used instead of
“at least 80 percent.”

 

1.9           The
term “Corporate Documents” shall mean the Company’s Certificate of Incorporation, as amended and/or its Bylaws,
as amended.

 

1.10         The
term “Effective Date” shall have the meaning set forth in the preamble.

 

1.11         The
term “Good Reason” shall have the meaning set forth in Section 4.3(c) herein.

 

1.12         The
term “Initial Term” shall have the meaning set forth in Section 2.2 herein.

 

     

     

    

 

1.13         The
term “Separation from Service” shall mean the Executive’s termination of employment with the Company Group for
any reason which constitutes a “separation from service” under Code Section 409A. Notwithstanding the foregoing, the
Executive’s employment relationship with the Company Group is considered to remain intact while the individual is on military
leave, sick leave or other bona fide leave of absence if there is a reasonable expectation that the Executive will return to perform
services for the Company Group and the period of such leave does not exceed six months, or if longer, so long as the Executive
retains a right to reemployment with the Company under applicable law or contract. Solely for purposes of determining whether a
Separation from Service has occurred, the Company will determine whether the Executive has terminated employment with the Company
Group based on whether it is reasonably anticipated by the Company and the Executive that the Executive will permanently cease
providing services to the Company Group, whether as an employee or independent contractor, or that the services to be performed
by the Executive, whether as an employee or independent contractor, will permanently decrease to no more than 20% of the average
level of bona fide services performed, whether as an employee or independent contractor, over the immediately preceding 36-month
period or such shorter period during which the Executive was performing services for the Company Group. If a leave of absence occurs
during such 36-month or shorter period which is not considered a Separation from Service, unpaid leaves of absence shall be disregarded
and the level of services provided during any paid leave of absence shall be presumed to be the level of services required to receive
the compensation paid with respect to such leave of absence.

 

1.14         The
term “Without Cause” shall have the meaning set forth in Section 4.3(b) herein.

 

1.15         The
term “Without Good Reason” shall have the meaning set forth in Section 4.3 herein.

 

Article
Two

POSITION AND DUTIES

 

2.           Employment.

 

2.1           Title.
The Executive shall serve as the President of the Company and agrees to perform services for the Company and such other affiliates
of the Company, as described in Section 2.3 herein.

 

2.2           Term.
The Executive’s employment shall be for an initial term of one (1) year (the “Initial Term”), commencing on the
Effective Date. The Executive’s employment shall be automatically extended on the day after the second year anniversary of
the Effective Date (“Automatic Extension”), and on each anniversary date thereof, for additional one (1) year periods
unless the Company provides notice that it does not intend to extend the term of the Executive’s employment at least sixty
(60) days in advance of the end of the Initial Term or any Automatic Extension.

 

2.3           Duties
and Responsibilities. The Executive shall report to the Chief Executive Officer of the Company (the “CEO”) and
in his capacity as an officer of the Company shall perform such duties and services as may be appropriate and as are assigned to
him by the CEO. During the term of this Agreement Executive shall, subject to the direction of the CEO, oversee and direct the
financial operations and function of the Company, and shall perform such duties as are customarily performed by President of a
company such as the Company or as are otherwise delegated to him from time to time by the Board.

 

     

     

    

 

2.4         Performance
of Duties. During the term of the Agreement, except as otherwise approved in writing by the CEO or as provided below, the Executive
agrees to devote his full business time, effort, skill and attention to the affairs of the Company and its subsidiaries, will use
his best efforts to promote the interests of the Company, and will discharge his responsibilities in a diligent and faithful manner,
consistent with sound business practices. For the avoidance of doubt, the Executive shall work no fewer than 40 hours per week
in discharging his responsibilities. The foregoing shall not, however, preclude Executive from devoting reasonable time, attention
and energy in connection with the following activities, provided that such activities do not materially interfere with the performance
of his duties and services hereunder:

 

(a)          fulfilling
speaking engagements;

 

(b)          engaging
in charitable and community activities;

 

(c)          managing
his personal business and investments; and

 

(d)          any
other activity approved of by the Board. For purposes of this Agreement, any activity specifically listed on Schedule A
shall be considered as having been approved by the Board.

 

2.5         Representations
and Warranties of the Executive with Respect to Conflicts, Past Employers and Corporate Opportunities. The Executive represents
and warrants that:

 

(a)          his
employment by the Company will not conflict with any obligations which he has to any other person, firm or entity; and

 

(b)          he
will not, without disclosure to and approval of the Board, directly or indirectly, assist or have an active interest in (whether
as a principal, stockholder, lender, employee, officer, director, partner, venturer, consultant or otherwise) any person, firm,
partnership, association, corporation or business organization, entity or enterprise that competes with or is engaged in a business
which is substantially similar to the business of the Company; provided, however, that ownership of not more than two percent
(2%) of the outstanding securities of any class of any publicly held corporation shall not be deemed a violation of this Section
2.5; provided, further, that any investment specifically listed on Schedule A shall not be deemed a violation of this Section 2.5.

 

2.6           Activities
and Interests with Companies Doing Business with the Company. In addition to those activities and interests of Executive disclosed
on Schedule A attached hereto, Executive shall promptly disclose to the Board, in accordance with the Company’s policies,
full information concerning any interests, direct or indirect, he holds (whether as a principal, stockholder, lender, executive,
director, officer, partner, venturer, consultant or otherwise) in any business which, as reasonably known to Executive, purchases
or provides services or products to, the Company or any of its subsidiaries, provided that the Executive need not disclose any
such interest resulting from ownership of not more than two percent (2%) of the outstanding securities of any class of any publicly
held corporation.

 

     

     

    

 

2.7           Other
Business Opportunities. Nothing in this Agreement shall be deemed to preclude the Executive from participating in other business
opportunities if and to the extent that: (a) such business opportunities are not directly competitive with, similar to the business
of the Company, or would otherwise be deemed to constitute an opportunity appropriate for the Company; (b) the Executive’s
activities with respect to such opportunities do not have a material adverse effect on the performance of the Executive’s
duties hereunder, and (c) the Executive’s activities with respect to such opportunity have been fully disclosed in writing
to the Board.

 

2.8           Reporting
Location. For purposes of this Agreement, the Executive’s reporting location shall be a location within a 30 mile radius
of Larchmont, New York; provided, however, that it is understood and agreed that Executive’s responsibilities may include
frequent travel to the company’s operating facilities.

 

Article
Three

compensation

 

3.           Compensation.

 

3.1           Base
Salary. Executive shall receive an annual base salary of One Hundred Twenty Thousand US Dollars (US$120,000.00), payable in
accordance with the Company’s then-existing payroll policies (the “Base Salary”) and subject to all applicable
withholding requirements. The Base Salary shall be reviewed by the Board and its Compensation Committee annually for adequacy.

 

3.2           Annual
Incentive. Executive will be eligible to receive an annual cash incentive payable for the achievement of performance goals
established by the Compensation Committee of up to forty percent (40%) of the Executive’s Base Salary. The Executive understands
and acknowledges that the ability or obligation of the Company to pay any cash incentives or bonus may be limited by provisions
in any then-existing debt facility or any then-outstanding debt issuance that may preclude such payments if any debt covenants
are or would be violated by payment of such Annual Incentive, if paid in cash, which covenants shall be memorialized from time
to time on Schedule 3.2 hereof. If an Annual Incentive payment is limited by these provisions, the payment may be made in
cash if such existing covenants have been specifically and explicitly waived in writing by any then-lender or investor; provided,
however, that no Annual Incentive can be distributed if the Company would be required to pay an amount for such a waiver that
it deems onerous and detrimental to the financial well being of the Company. The Annual Incentive cash payment in this case would
be deferred and accrued until such time as the debt covenants are satisfied, or the Incentive payment would be given currently
in fully vested Company common stock, at the option of the Executive. The actual earned Annual Incentive, if any, payable to Executive
for any performance period will depend upon the extent to which the applicable performance goal(s) specified by the Compensation
Committee are achieved and will be decreased or increased for under- or over- performance. Except as specifically provided herein,
Executive’s Annual Incentive will be subject to the terms and conditions of a formal bonus plan that may be adopted by the
Compensation Committee from time to time; provided, that if there is no formal bonus plan that has been established by the Company,
the Executive’s Annual Incentives shall be established each year by the Compensation Committee.

     

     

    

  

3.3           Long
Term Incentives.

 

(i)          Long-Term
Ongoing Performance Equity Incentive. Executive will be eligible to receive long-term performance equity incentives at a level
and on conditions as the Compensation Committee shall establish. Any long-term incentive will be subject to terms and conditions
of the Company’s 2012 Stock Incentive Plan (the “LTIP”), or any successor thereto, or any other equity-based
compensation plan that may be established by the Committee and approved by the shareholders. In addition, any long-term incentive
will be subject to the Committee’s standard terms and conditions for the applicable type of award, including vesting criteria
such as continued service or performance objectives.

 

(ii)         Stock
Grant. Executive will be granted 1% of the Company’s total outstanding shares of Common Stock (the “Stock Grant”),
calculated after the Rights Offering, as part of his equity compensation component. The stock will vest pursuant to the following
schedule when the price thresholds identified immediately below have been achieved, which thresholds will be measured and approved
based on a 30-trading day volume weighted average price (VWAP):

 

		o	20%        @ $0.30/share

		o	30%        @ $0.40/share

		o	30%        @ $0.50/share

		o	20%        @ $0.60/share

 

3.4          Participation
in Benefit Plans.

 

(a)          Retirement
Plans. Executive shall be entitled to participate, without any waiting or eligibility periods, in all qualified retirement
plans provided to other executive officers and other key employees.

 

(b)          Employee
Benefit Plans and Insurance. The Executive shall have the right to participate in employee benefit plans and insurance programs
of the Company that the Company may sponsor from time to time and to receive customary Company benefits, if those benefits are
so offered. Nothing herein shall obligate Executive to accept such benefits if and when they are offered.

 

     

     

    

 

(c)          Vacation.

 

(i)          The
Executive shall be entitled with 15 days of annual vacation consistent with Company existing policy.

 

(d)          Paid
Holidays. The Executive shall be entitled to 6 paid holidays, as are generally available to all employees.

 

3.5          Relocation.
In the event that Executive is required to move from his primary residence and consents to such move, then Executive shall be provided
with relocation assistance as provided below:

 

(a)          Housing
and Temporary Lodging. The Company will pay the costs, for the Executive and his family, of house-hunting trips and the cost
of transporting the Executive, his spouse, furniture, household effects, and vehicles, to the area in which the Company will be
headquartered. In addition, the Company will pay the cost of the Executive’s travel, temporary living expenses, including
housing, whether hotel or apartment, and meals, during the period prior to the Executive’s move to the city in which the
Company will be headquartered.

 

3.7         
Business Related Expenses

 

(a)          Reimbursement.
Executive shall be entitled to reimbursement within a reasonable time for all properly documented and approved expenses for travel,
including the time during which Executive is providing Consulting services. The Company shall reimburse business expenses of Executive
directly related to Company business, including, but not limited to, airfare, lodging, meals, travel expenses, medical expenses
while traveling not covered by insurance, business entertainment, expenses associated with entertaining business persons, local
expenses to governments or governmental officials, tariffs, applicable taxes outside of the United States, special expenses associated
with travel to certain countries, supplemental life insurance or supplemental insurance of any kind or special insurance rates
or charges for travel outside the Executive’s country of residence (unless such insurance is being provided by the Company),
rental cars and insurance for rental cars, and any other expenses of travel that are reasonable in nature or that have been otherwise
pre-approved. Executive shall be governed by the travel and entertainment policy in effect at the Company.

 

3.6           Payroll
Procedures and Policies. All payments required to be made by the Company to the Executive pursuant to this Article Three shall
be paid on a regular basis in accordance with the Company’s normal payroll procedures and policies.

 

     

     

    

 

Article
Four

Termination OF EMPLOYMENT

 

4.1          Events
of Termination. Executive’s employment, the Employment Period, the Base Salary, and any and all other rights of Executive
under this Agreement or otherwise as an employee of the Company will terminate (except as otherwise provided in this Section 4):

 

(a) upon the death of the Executive;

 

(b) upon termination of employment
due to the Disability of the Executive;

 

(c) upon termination by the
Company for Cause;

 

(d) upon resignation of employment
by the Executive without Good Reason;

 

(e) upon termination by the
Company without Cause;

 

(f) upon the resignation of
employment by Executive for Good Reason.

 

Upon termination of Executive’s
employment, as provided above or otherwise, Executive’s rights respecting benefits, stock options, restricted stock, and
other equity awards will be determined under the applicable plan or program providing the same.

 

4.2           Definition
and Determination of Disability. If the Company determines in good faith that the Disability (as defined below) of the Executive
has occurred during the Employment Term, the Company may give the Executive notice of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment hereunder shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”); provided, that, within the
30-day period after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties
hereunder on a full-time basis for an aggregate of 180 days within any given period of 270 consecutive days (in addition to
any statutorily required leave of absence and any leave of absence approved by the Company) as a result of incapacity of the Executive,
despite any reasonable accommodation required by law, due to bodily injury or disease or any other mental or physical illness,
which will, in the opinion of a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s
legal representative, be permanent and continuous during the remainder of the Executive’s life.

 

4.3          Definition
of “Cause,” “Without Cause,” and “Good Reason.”

 

(a)          Termination
for Cause.

 

The Executive’s
employment hereunder may be terminated for Cause. For purposes of this Agreement, “Cause” shall mean:

 

     

     

    

 

(i)          the
willful and continued failure of the Executive to perform substantially the Executive’s duties hereunder (other than any
such failure resulting from bodily injury or disease or any other incapacity due to mental or physical illness) after a written
demand for substantial performance is delivered to the Executive by the Board or the Chairman of the Company, which specifically
identifies the manner in which the Board or the Chairman of the Company believes the Executive has not substantially performed
the Executive’s duties; or 

 

(ii)         the
willful engaging by the Executive in illegal conduct or gross misconduct that is materially and demonstrably detrimental to the
Company and/or its affiliated companies, monetarily or otherwise.

 

For purposes
of this provision, no act, or failure to act, on the part of the Executive shall be considered “willful” unless done,
or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission
was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, upon the instructions of the Chairman or another Board Member of Company, or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its affiliated companies. The cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than two-thirds of the entire membership of the Board then in office, excluding the Executive, at a meeting of
the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

 

(iii)        Executive’s
material violation of any Company policy or code of ethics or conduct that may be in force from time to time;

 

(iv)        the
appropriation (or attempted appropriation) of a material business opportunity of the Company without first presenting it to the
Company in writing and giving it a reasonable opportunity to accept or reject such opportunity, including attempting to secure
or securing any personal profit in connection with any transaction entered into on behalf of the Company;

 

(v)         the
Executive’s conviction of, or plea of nolo contendere to, any felony of theft, fraud, embezzlement or violent crime, or the
entering of a guilty plea or a plea of non contendere for any other crime for which imprisonment is a punishment.

 

(vi)        the
misappropriation (or attempted misappropriation) of any of the Company’s funds or property.

 

     

     

    

 

(b)          Termination
without Cause.

 

The determination
of whether the Executive’s employment is terminable for Cause shall be made solely by the Company’s Board of Directors,
which shall act in good faith in making such determination. All terminations by the Company that are not for Cause, or on the occasion
of the Executive’s death or disability shall be considered Without Cause.

 

(c)          Termination
for Good Reason.

 

The Executive’s
employment hereunder may be terminated for Good Reason. For all purposes under this Agreement, “Good Reason” shall
mean the occurrence of one or more of the following events arising without the express written consent of the Executive,
but only if the Executive notifies the Company in writing of the event within sixty (60) days following the occurrence of
the event, the event remains uncured after the expiration of thirty (30) days from receipt of such notice, and the Executive
resigns effective no later than thirty (30) days following the Company’s failure to cure the event:

 

(i)           a
material diminution in the Executive’s Base Salary;

 

(ii)          a
material diminution in the Executive’s authority, duties, or responsibilities (including status, offices, titles and reporting
requirements), duties, functions, responsibilities or authority as contemplated by Section 2.3 of this Agreement, or any other
action by the Company that results in a diminution in such position, duties, functions, responsibilities or authority, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive as provided for herein;

 

(iii)          a
material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report,
including a requirement that the Executive report to any corporate officer or employee instead of reporting directly to the Chief
Executive Officer or the Board of Directors of the Company;

 

(iv)           the
Company or a subsidiary thereof requiring the Executive to be permanently based anywhere other than within thirty (30) miles
from the location other than as provided in Section 2.8 of this Agreement;

 

(v)           any
other action that constitutes a material breach by the Company of the Agreement;

 

(vi)           or
the Executive’s ceasing to be the highest ranking financial officer of the Company; or

 

A resignation
of employment by Executive for any other reason or under any other circumstances will be a resignation “Without Good Reason.”

 

     

     

    

 

4.4           Notice
of Termination. Any termination of the Executive’s employment hereunder by the Company or by the Executive (other than
a termination pursuant to Section 4.1(a)) shall be communicated by a Notice of Termination (as defined below) to the other party
hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which (a) indicates the
specific termination provision in this Agreement relied upon, (b) in the case of a termination for Disability, Cause or Good
Reason, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and (c) specifies the Date of Termination (as defined in Section 4.5 below);
provided, however, that notwithstanding any provision in this Agreement to the contrary, a Notice of Termination given in connection
with a termination for Good Reason shall be given by the Executive within a reasonable period of time, not to exceed 60 days,
following the occurrence of the event giving rise to such right of termination. The failure by the Company or the Executive to
set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Disability, Cause, or Good Reason
shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such
fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

 

4.5           Date
of Termination. For purposes of this Agreement, the “Date of Termination” shall mean the effective date of termination
of the Executive’s employment hereunder, which date shall be (a) if the Executive’s employment is terminated by
the Executive’s death, the date of the Executive’s death, (b) if the Executive’s employment is terminated
because of the Executive’s Disability, the Disability Effective Date, (c) if the Executive’s employment is terminated
by the Company (or applicable affiliated company) for Cause or by the Executive for Good Reason, the date on which the Notice of
Termination is given, and (d) if the Executive’s employment is terminated for any other reason, the date specified in
the Notice of Termination, which date shall in no event be earlier than the date such notice is given; provided, however,
that if within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 

 

4.6           Obligations
of the Company upon Termination. 

 

(a)            General;
Good Reason; Other Than for Cause, Death or Disability. Should Executive’s employment with the Company be terminated
by the Company Without Cause or should Executive resign his employment with the Company for Good Reason, then, subject to Executive
executing, and failing to revoke during any applicable revocation period, the Severance Agreement and General Release attached
as Exhibit A to this Agreement within time period provided immediately herein, after Executive’s termination
of employment the Company will provide to Executive the following:

 

(i)          to
the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive under any annual bonus plan, program, policy, practice
or arrangement or contract or agreement of the Company and its affiliated companies (such other amounts and benefits hereinafter
referred to as the “Other Benefits”).

 

     

     

    

 

Provided, however, that
in the event the Company elects not to renew the Executive’s Agreement for an additional term, whether such extension comes
after conclusion of the Initial Term, or such additional term pursuant to an Automatic Extension and provided, further that the
Company has satisfied all obligations due the Executive under the terms of this Agreement, the Executive shall have no further
rights and the Company shall have no further obligations under this Agreement, except for Article V and the Indemnification Agreement
executed between the Company and the Executive thereunder.

 

(b)          Death.
If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Term, this Agreement
shall terminate without further compensation obligations to the Executive’s legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (which shall be paid to the Executive’s estate or beneficiary, as applicable,
in a lump sum in cash within 90 days of the Date of Termination) and the timely payment or settlement of any other amount
pursuant the Other Benefits and (ii) treatment of all other compensation under existing plans as provided by the terms and
rules of those plans. 

 

(c)          Disability.
If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Term, this
Agreement shall terminate without further compensation obligations to the Executive, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive in a lump sum in cash within 90 days of the Date of Termination) and the
timely payment or settlement of any other amount pursuant to the Other Benefits and (ii) treatment of all other compensation
under existing plans as provided by the terms and rules of those plans. 

 

(d)          Cause;
Other than for Good Reason. If the Executive’s employment is terminated for Cause during the Employment Term, this Agreement
shall terminate without further compensation obligations to the Executive other than the obligation to pay to the Executive Base
Salary through the Date of Termination plus the amount of any compensation previously deferred by the Executive, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates the Executive’s employment during the Employment Term,
and such termination is Without Good Reason, this Agreement shall terminate without further compensation obligations to the Executive,
other than for the that portion Executive’s Base Salary that was not previously paid to the Executive from the last payment
date through the effective date of the Executive’s voluntary termination and the timely payment or provision of the Other
Benefits, as provided in any applicable plan, and the Executive shall have no further obligations nor liability to the Company.
In such case, any amounts owed to the Executive shall be paid to the Executive in a lump sum in cash within 90 days of the
Date of Termination subject to applicable laws and regulations. 

 

     

     

    

 

4.7         Code
Section 409A.

 

(a)          General.
Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed at the time of his Separation from
Service from the Company to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code and
if any amounts otherwise payable pursuant to this Agreement within the first six (6) months following the Executive’s
Separation from Service would be subject to the excise tax imposed by Section 409A of the Code, then payment of such portion
of the benefits subject to the excise tax shall be suspended and shall be paid in a lump sum to the Executive on the first business
day following the expiration of six (6) months from the date of the Executive’s Separation from Service.

 

(b)          409A
Compliance. It is intended that any amounts payable under this Agreement and the Company’s and Executive’s exercise
of authority or discretion hereunder shall comply with Internal Revenue Code Section 409A (including the Treasury regulations and
other published guidance relating thereto) so as not to subject Executive to the payment of any interest or additional tax imposed
under Internal Revenue Code Section 409A. To the extent any amount payable to Executive from Company, per this Agreement or otherwise,
would trigger the additional tax imposed by Internal Revenue Code Section 409A, the parties agree to adopt any necessary amendments
to this Agreement in order to avoid such additional tax.

 

Article
Five

indemnification

 

5.          Indemnification.
The Executive shall be indemnified and held harmless pursuant to the terms and conditions set forth in the Indemnity Agreement
substantially in the form attached as Exhibit B hereto.

 

Article
Six

confidentiality

 

6.           Confidentially;
Non-Competition; and Non-Solicitation. 

 

6.1           Confidentiality.
In consideration of employment by the Company and Executive’s receipt of the salary and other benefits associated with Executive’s
employment, and in acknowledgment that (a) the Company is engaged in the automotive software business, (b) maintains secret and
confidential information, (c) during the course of Executive’s employment by the Company such secret or confidential information
may become known to Executive, and (d) full protection of the Company’s business makes it essential that no employee appropriate
for his or her own use, or disclose such secret or confidential information, Executive agrees that during the time of Executive’s
employment and for a period of two (2) years following the termination of Executive’s employment with the Company, Executive
agrees to hold in strict confidence and shall not, directly or indirectly, disclose or reveal to any person, or use for his own
personal benefit or for the benefit of anyone else, any trade secrets, confidential dealings, or other confidential or proprietary
information of any kind, nature, or description (whether or not acquired, learned, obtained, or developed by Executive alone or
in conjunction with others) belonging to or concerning the Company or any of its subsidiaries, except (i) with the prior written
consent of the Company duly authorized by its Board, (ii) in the course of the proper performance of Executive’s duties hereunder,
(iii) for information (x) that becomes generally available to the public other than as a result of unauthorized disclosure by Executive
or his affiliates or (y) that becomes available to Executive on a non-confidential basis from a source other than the Company or
its subsidiaries who is not bound by a duty of confidentiality, or other contractual, legal, or fiduciary obligation, to the Company,
or (iv) as required by applicable law or legal process.

 

     

     

    

 

6.2           Non-Competition.
During Executive’s employment with the Company and within one (1) year after termination of his employment for any reason,
Executive shall not, in the Restrictive Area (as defined below) be engaged as an officer or executive of, or in any way be associated
in a management or ownership capacity with any corporation, company, partnership or other enterprise or venture which conducts
a business which is in direct competition with the business of the Company; provided, however, that Executive may own not
more than two percent (2%) of the outstanding securities, or equivalent equity interests, of any class of any corporation, company,
partnership, or either enterprise that is in direct competition with the business of the Company, which securities are listed on
a national securities exchange or traded in the over-the-counter market. It is expressly agreed that the remedy at law for breach
of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof. For purposes of this
Agreement, “Restrictive Area” shall mean anywhere within the United States; provided, however, if a court determines
such a geographic scope is unenforceable, the Restricted Area shall be anywhere within the Northeastern United States; provided,
however, if a court determines such a geographic scope is unenforceable, the Restricted Area shall be anywhere within the State
of New York.

 

6.3           Non-Solicitation.
Executive also agrees that he will not, directly or indirectly, during the term of his employment or within one (1) year after
termination of his employment for any reason, in any manner, encourage, persuade, or induce any other employee of the Company to
terminate his employment, or any person or entity engaged by the Company to represent it to terminate that relationship without
the express written approval of the Company; provided, however, that in the event an employee with whom the Executive had
a preexisting relationship prior to his employment with the Company individually elects to resign as a consequence of the Executive’s
having left the Company’s employ, this non-solicitation provision in this Section 6.3 shall not prohibit their subsequent
association. It is expressly agreed that the remedy at law for breach of this covenant is inadequate and that injunctive relief
shall be available to prevent the breach thereof.

 

6.4           Return
of Company Property. On the date of Executive’s termination of employment with the Company for any reason (or at any
time prior thereto at the Company’s request), Executive shall return all property belonging to the Company or its affiliates
(including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other
equipment, or documents and property belonging to the Company).  Executive may retain the Executive’s rolodex and similar
address books provided that such items only include contact information

 

6.5.          The duration
of any covenant contained in this Article Six, shall be extended during any period the Executive is in breach of the applicable
covenant.

 

     

     

    

 

Article
Seven

 

miscellaneous

 

7.            Miscellaneous.

 

7.1           Benefit.
This Agreement shall inure to the benefit of and be binding upon each of the Parties, and their respective successors. This Agreement
shall not be assignable by any Party without the prior written consent of the other Party. The Company shall require any successor,
whether direct or indirect, to all or substantially all the business and/or assets of the Company expressly to assume and agree
to perform, by instrument in a form reasonably satisfactory to Executive, this Agreement and any other agreements between Executive
and the Company or any of its subsidiaries, in the same manner and to the same extent as the Company.

 

7.2           Covenants
of Article Six Are Essential Independent Covenants. The covenants by Executive in Article Six are essential elements of this
Agreement, and without Executive’s agreement to comply with such covenants, the Company would not have entered into this
Agreement or employed Executive. The Company and the Executive have independently consulted with their respective counsel and have
been advised in all respects concerning the reasonableness and propriety of such covenants, with specific regard to the nature
of the business conducted by the Company.

 

If Executive’s
employment hereunder expires or is terminated, this Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of Executive in Article Six.

 

7.3           Governing
Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada without resort to
any principle of conflict of laws that would require application of the laws of any other jurisdiction.

 

7.4           Section
409A. Consistent with Section 4.8 hereof, it is the intention of the parties that this Agreement complies with Section 409A
and the regulations thereunder, and that the terms and provisions of the Agreement shall be interpreted and implemented accordingly.
Notwithstanding the foregoing, it is expressly agreed to and understood by the Executive that all tax related matters
inclusive of Section 409A are the sole responsibility of the executive and under no circumstances shall the Company
be liable for any tax related matters as a result of this Agreement as it relates to the Executive.

 

7.5           Counterparts.
This Agreement may be executed in counterparts and via facsimile, each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same Agreement. Each such counterpart shall become effective when one counterpart
has been signed by each Party thereto.

 

7.6           Headings.
The headings of the various articles and sections of this Agreement are for convenience of reference only and shall not be deemed
a part of this Agreement or considered in construing the provisions thereof.

 

     

     

    

 

7.7           Severability.
Any term or provision of this Agreement that shall be prohibited or declared invalid or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the extent of such prohibition or declaration, without invalidating the remaining
terms and provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and if any
term or provision of this Agreement is held by any court of competent jurisdiction to be void, voidable, invalid or unenforceable
in any given circumstance or situation, then all other terms and provisions hereof, being severable, shall remain in full force
and effect in such circumstance or situation, and such term or provision shall remain valid and in effect in any other circumstances
or situation.

 

7.8           Construction.
Use of the masculine pronoun herein shall be deemed to refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No inference in favor of or against any Party shall be drawn
from the fact that such Party or such Party’s counsel has drafted any portion of this Agreement.

 

7.9           Equitable
Remedies. The Parties hereto agree that, in the event of a breach of this Agreement by either Party, the other Party, if not
then in breach of this Agreement, may be without an adequate remedy at law owing to the unique nature of the contemplated relationship.
In recognition thereof, in addition to (and not in lieu of) any remedies at law that may be available to the non-breaching Party,
the non-breaching Party shall be entitled to obtain equitable relief, including the remedies of specific performance and injunction,
in the event of a breach of this Agreement, by the Party in breach, and no attempt on the part of the non-breaching Party to obtain
such equitable relief shall be deemed to constitute an election of remedies by the non-breaching Party that would preclude the
non-breaching Party from obtaining any remedies at law to which it would otherwise be entitled.

 

7.10         No
Waiver. No failure, delay or omission of or by any Party in exercising any right, power or remedy upon any breach or default
of any other Party, or otherwise, shall impair any such rights, powers or remedies of the Party not in breach or default, nor shall
it be construed to be a waiver of any such right, power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or character on the part of any Party of any provisions of this Agreement must
be in writing and be executed by the Parties and shall be effective only to the extent specifically set forth in such writing.

 

7.11         Remedies
Cumulative. All remedies provided in this Agreement, by law or otherwise, shall be cumulative and not alternative.

 

7.12         Amendment.
This Agreement may be amended only by a writing signed by all of the Parties hereto.

 

7.13         Entire
Contract. This Agreement and the documents and instruments referred to herein constitute the entire contract between the parties
to this Agreement and supersede all other understandings, written or oral, with respect to the subject matter of this Agreement.

 

     

     

    

 

7.14         Survival.
This Agreement shall constitute a binding obligation of the Company and any successor thereto. Notwithstanding any other provision
in this Agreement, the obligations under Article Five and Article Six shall survive termination of this Agreement.

 

7.15         Savings
Clause. Notwithstanding any other provision of this Agreement, if the indemnification provisions in Exhibit B hereto
or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless
indemnify Executive as to Expenses (as that term is defined in the Indemnification Agreement attached hereto as Exhibit B),
judgments, fines, penalties and amounts paid in settlement with respect to any Proceeding (as that term is defined in the Indemnification
Agreement attached hereto as Exhibit B) to the full extent permitted by any applicable portion of this Agreement that shall
not have been invalidated and to the fullest extent permitted by applicable law.

 

7.16         Modifications
and Waivers. Notwithstanding any other provision of this Agreement, the indemnification provisions contained in the Indemnification
Agreement in Exhibit B hereto may be amended from time to time to reflect changes in Nevada law or for other reasons; provided,
that no other modifications shall be made that are not identical or substantially similar to those modifications that are made
to all then-current directors and officers.

 

7.17         Notices.
All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been given (i)
when delivered by hand or (ii) if mailed by certified or registered mail with postage prepaid, on the third day after the date
on which it is so mailed:

 

(a)           if
to Executive:

 

Grant Sahag

[See Recent
Address on File with Company]

 

(b)           if
to the Company:

 

GlyEco, Inc.

Attn: Chairman, Compensation Committee

4802 E. Ray Rd.,
Ste. 23-408

Phoenix, AZ 85044

 

or to such other address
as may have been furnished to Executive by the Company or to the Company by Executive, as the case may be.

 

7.18         No
Limitation. Notwithstanding any other provision of this Agreement, for avoidance of doubt, the parties confirm that the foregoing
does not apply to or limit Executive’s rights under Nevada law or the Company’s Corporate Documents.

 

[Signatures Follow On Next Page]

 

     

     

    

  

IN WITNESS WHEREOF,
the parties have set their hands and seals hereunto on the date first above written.

 

 

	GLYECO, INC.	 	EXECUTIVE
	 	 	 	 
	By:	/s/ David Ide	 	/s/ Grant Sahag
	Name:  	David Ide	 	Name: Grant Sahag
	Title:	President and CEO	 	

 

     

     

    

Schedule A

 

Outside Activities/Investments

Grant Sahag

 

	Company or

Project Name	 	Nature of

Business	 	Date Hired or

Commenced

Involvement	 	Position	 	Compensation	 	Annual Time

Commitment, (time away

from office)
	 	 	 	 	 	 	`	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

 

Dated: [____], 2016

 

Initials:          Executive:      _____     Company:    ______

 

     

     

    

 

Schedule 3.2

 

The Company advises the Executive that
as of February 12, 2016, there are no covenants of any debt that would prohibit the payment of the Annual Incentive. The Company
also advises the Executive that it is current negotiating with several lenders for potential lines of credit, which may, in definitive
agreements provide for restrictive operating or financial covenants; which, if applicable, will be memorialized on this Schedule
3.2 as provided in the Agreement.Exhibit 4.1

 

THIS WARRANT AND THE SHARES ISSUABLE UPON
THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN A SUBSCRIPTION AGREEMENT DATED AS OF ___________, 2016, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL,
IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.

 

COMMON STOCK PURCHASE WARRANT

 

EASTSIDE DISTILLING, INC.

 

Right to
Purchase __________ Shares of Common Stock, par value $.0001 per share

 

THIS CERTIFIES THAT,
for value received_______________ or its registered assigns, is entitled to purchase from Eastside Distilling, Inc., a Nevada
corporation whose shares of Common Stock (defined below) (the “Company”), at any time or from time to time during
the period specified in Paragraph 2 hereof, _______________ (________) fully paid and nonassessable shares of the Company’s
Common Stock, par value $.0001 per share (the “Common Stock”), at an exercise price per whole share equal to
$0.18 (the “Exercise Price”). The term “Warrant Shares,” as used herein, refers to the shares
of Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price are subject to adjustment as provided in Paragraph
4 hereof. The term “Warrants” means this Warrant and the other warrants issued pursuant to that certain Subscription
Agreement and described in that certain Amended and Restated Confidential Private Placement Memorandum Supplement, dated February
15, 2016, by and among the Company and the Buyers listed on the execution pages thereto.

 

This Warrant is subject
to the following terms, provisions, and conditions:

 

1.           Manner
of Exercise; Issuance of Certificates; Payment for Shares. Subject to the provisions hereof, this Warrant may be
exercised by the holder hereof, in whole or in part, by the surrender of this Warrant, together with a completed exercise
agreement in the form attached hereto (the “Exercise Agreement”), to the Company during normal business
hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company
as it may designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or official bank
check or by wire transfer for the account of the Company of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder’s
designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding five (5) business
days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be
requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been exercised.

 

     

     

    

 

Notwithstanding anything
in this Warrant to the contrary, in no event shall the holder of this Warrant be entitled to exercise a number of Warrants (or
portions thereof) in excess of the number of Warrants (or portions thereof) upon exercise of which the sum of (i) 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 unexercised Warrants and the unexercised or unconverted portion of any other securities
of the Company) subject to a limitation on conversion or exercise analogous to the limitation contained herein and (ii) the number
of shares of Common Stock issuable upon exercise of the Warrants (or portions thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the
outstanding shares of Common Stock. For purposes of the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as
otherwise provided in clause (i) of the preceding sentence. Notwithstanding anything to the contrary contained herein, the limitation
on exercise of this Warrant set forth herein may not be amended without the written consent of the holder hereof and the Company.

 

2.           Period
of Exercise. This Warrant is exercisable at any time or from time to time on or after the date on which this Warrant is
issued and delivered pursuant to the terms of the Subscription Agreement and before 6:00 p.m., New York, New York time on the
third (3rd) anniversary of the date of issuance (the “Exercise Period”).

 

3.           Certain
Agreements of the Company. The Company hereby covenants and agrees as follows:

 

(a)          Shares to
be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof.

 

(b)          Reservation
of Shares. During the Exercise Period, the Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of this Warrant.

 

(c)          Certain
Actions Prohibited. The Company will not, by amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment,
consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then
in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

 

    	2

     

    

 

(d)          Successors
and Assigns. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition
of all or substantially all the Company’s assets.

 

4.           Antidilution
Provisions. During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Paragraph 4. In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be rounded up to the nearest cent.

 

(a)          Subdivision
or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares,
then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately
increased.

 

(b)          Consolidation,
Merger or Sale. In case of any consolidation of the Company with, or merger of the Company into any other corporation,
or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan
of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate provision
will be made whereby the holder of this Warrant will have the right to acquire and receive upon exercise of this Warrant in lieu
of the shares of Common Stock immediately theretofore acquirable upon the exercise of this Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such consolidation, merger or sale or conveyance not taken place. In
any such case, the Company will make appropriate provision to insure that the provisions of this Paragraph 4 hereof will thereafter
be applicable as nearly as may be in relation to any shares of stock or securities thereafter deliverable upon the exercise of
this Warrant. The Company will not effect any consolidation, merger or sale or conveyance unless prior to the consummation thereof,
the successor corporation (if other than the Company) assumes by written instrument the obligations under this Paragraph 4 and
the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the holder may be entitled to acquire.

 

(c)          Distribution
of Assets. In case the Company shall declare or make any distribution of its assets (including cash) to holders of Common
Stock as a partial liquidating dividend, by way of return of capital or otherwise, then, after the date of record for determining
shareholders entitled to such distribution, but prior to the date of distribution, the holder of this Warrant shall be entitled
upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, to receive the amount
of such assets which would have been payable to the holder 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.

 

    	3

     

    

 

(d)          Notice of
Adjustment. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting
from such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall
be certified by the Chief Financial Officer of the Company.

 

(e)          Minimum
Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.

 

(f)           No Fractional
Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same fraction
of the Market Price of a share of Common Stock on the date of such exercise.

 

(g)          Other Notices.
In case at any time:

 

(1)          the Company
shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution (including
dividends or distributions payable in cash out of retained earnings) to the holders of the Common Stock;

 

(2)          the Company
shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights;

 

(3)          there shall
be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all its assets to, another corporation or entity; or

 

(4)          there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in each such case, the Company shall
give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record shall be taken
for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for
determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof
by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall
be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation,
or winding-up, as the case may be. Such notice shall be given at least 30 days prior to the record date or the date on which the
Company’s books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (1), (2), (3) and (4) above.

 

    	4

     

    

 

(h)          Certain
Events. If any event occurs of the type contemplated by the adjustment provisions of this Paragraph 4 but not expressly
provided for by such provisions, the Company will give notice of such event as provided in Paragraph 4(d) hereof, and the Company’s
Board of Directors will make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock acquirable
upon exercise of this Warrant so that the rights of the holder shall be neither enhanced nor diminished by such event.

 

(i)           Certain
Definitions.

 

(1)          “Market
Price,” as of any date, (i) means the average of the last reported sale prices for the shares of Common Stock on
the OTC Markets for the five (5) Trading Days immediately preceding such date as reported by Bloomberg, or (ii) if the OTC Markets
is not the principal trading market for the shares of Common Stock, the average of the last reported sale prices on the principal
trading market for the Common Stock during the same period as reported by Bloomberg, or (iii) if market value cannot be calculated
as of such date on any of the foregoing bases, the Market Price shall be the fair market value as reasonably determined in good
faith by (a) the Board of Directors of the Company or, at the option of a majority-in-interest of the holders of the outstanding
Warrants by (b) an independent investment bank of nationally recognized standing in the valuation of businesses similar to the
business of the corporation. The manner of determining the Market Price of the Common Stock set forth in the foregoing definition
shall apply with respect to any other security in respect of which a determination as to market value must be made hereunder.

 

(2)          “Common
Stock,” for purposes of this Paragraph 4, includes the Common Stock, par value $.0001 per share, and any additional
class of stock of the Company having no preference as to dividends or distributions on liquidation, provided that the shares purchasable
pursuant to this Warrant shall include only shares of Common Stock, par value $.0001 per share, in respect of which this Warrant
is exercisable, or shares resulting from any subdivision or combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to in Paragraph 4(b) hereof, the stock or other securities
or property provided for in such Paragraph.

 

5.           Issue
Tax. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the
holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate
in a name other than the holder of this Warrant.

 

6.           No
Rights or Liabilities as a Shareholder. This Warrant shall not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Company. No provision of this Warrant, in the absence of affirmative action by the holder
hereof to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall
give rise to any liability of such holder for the Exercise Price or as a shareholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.

 

    	5

     

    

 

7.           Transfer,
Exchange, and Replacement of Warrant.

 

(a)          Restriction
on Transfer. This Warrant and the rights granted to the holder hereof are transferable, in whole or in part, upon surrender
of this Warrant, together with a properly executed assignment in the form attached hereto, at the office or agency of the Company
referred to in Paragraph 7(e) below, provided, however, that any transfer or assignment shall be subject to the conditions
set forth in Paragraph 7(f) hereof and to the applicable provisions of the Subscription Agreement. Until due presentment for registration
of transfer on the books of the Company, the Company may treat the registered holder hereof as the owner and holder hereof for
all purposes, and the Company shall not be affected by any notice to the contrary.

 

(b)          Warrant
Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the office or agency of the Company referred to in Paragraph 7(e) below, for new Warrants of like tenor representing in the
aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants
to represent the right to purchase such number of shares as shall be designated by the holder hereof at the time of such surrender.

 

(c)          Replacement
of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

(d)          Cancellation;
Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange, or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the holder or transferees) and charges payable
in connection with the preparation, execution, and delivery of Warrants pursuant to this Paragraph 7.

 

(e)          Register.
The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

 

(f)          Exercise
or Transfer Without Registration. If, at the time of the surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not be
registered under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition
of allowing such exercise, transfer, or exchange, (i) that the holder or transferee of this Warrant, as the case may be, furnish
to the Company a written opinion of counsel, which opinion and counsel are acceptable to the Company, to the effect that such exercise,
transfer, or exchange may be made without registration under said Act and under applicable state securities or blue sky laws, (ii)
that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company
and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an “accredited investor” shall be required in connection with
a transfer pursuant to Rule 144 under the Securities Act. The first holder of this Warrant, by taking and holding the same, represents
to the Company that such holder is acquiring this Warrant for investment and not with a view to the distribution thereof.

 

    	6

     

    

 

8.           Notices.
All notices, requests, and other communications required or permitted to be given or delivered hereunder to the holder of
this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to such holder at the address shown for such holder on the
books of the Company, or at such other address as shall have been furnished to the Company by notice from such holder. All
notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be
in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight
mail courier, postage prepaid and addressed, to the office of the Company at 1805 SE Martin Luther King Jr. Blvd., Portland,
Oregon 97214 Attention: President, or at such other address as shall have been furnished to the holder of this Warrant by
notice, or at such other address as shall have been furnished to the holder of this Warrant by notice from the Company. Any
such notice, request, or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a
writing personally delivered or sent by certified or registered mail or by recognized overnight mail courier as provided
above. All notices, requests, and other communications shall be deemed to have been given either at the time of the receipt
thereof by the person entitled to receive such notice at the address of such person for purposes of this Paragraph 8, or, if
mailed by registered or certified mail or with a recognized overnight mail courier upon deposit with the United States Post
Office or such overnight mail courier, if postage is prepaid and the mailing is properly addressed, as the case may be.

 

9.           Governing
Law. THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN COUNTY OF
PORTLAND, OREGON, WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING.
NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES
AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING
UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE
PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

 

    	7

     

    

 

10.         Miscellaneous.

 

(a)          If the resale
of the Warrant Shares by the holder is not registered pursuant to an effective registration statement under the Securities Act
and this Warrant is exercised in whole or in part, then each certificate representing Warrant Shares issued upon the exercise of
this Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS.”

 

(b)          Amendments.
This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the holder hereof.

 

(c)          Descriptive
Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions hereof.

 

(d)          Remedies.
The Company 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 Company acknowledges that the remedy at law for
a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Warrant, 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 Warrant 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.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

    	8

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be signed by its duly authorized officer.

 

	 	EASTSIDE DISTILLING, INC.
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

Dated as of __________ __, 2016

 

     

     

    

 

FORM OF EXERCISE AGREEMENT

 

Dated: ________ __, 20__

 

	To:	 	 

 

The undersigned, pursuant
to the provisions set forth in the within Warrant, hereby agrees to purchase ________ shares of Common Stock covered by such Warrant,
and makes payment herewith in full therefor at the price per share provided by such Warrant in cash or by certified or official
bank check in the amount of $_________. Please issue a certificate or certificates for such shares of Common Stock in the name
of and pay any cash for any fractional share to:

 

	 	Name:	 
	 	 	 
	 	Signature:	 
	 	Address:	 
	 	 	 

 

	 	Note:	The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

 

and, if said number of shares of Common
Stock shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned
covering the balance of the shares purchasable thereunder less any fraction of a share paid in cash.

 

     

     

    

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED,
the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth herein below, to:

 

	Name of Assignee	 	Address	 	No of Shares
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

, and hereby irrevocably constitutes and
appoints ___________________________________ as agent and attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.

 

Dated:  ________ __, 201_

 

	In the presence of:	 	 

 

	 	 Name:	 

 

	 	Signature:	 
	 	Title of Signing Officer or Agent (if any):

	 	 	 
	 	Address:	 
	 	 	 

 

	 	Note:	The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

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