[FORM OF WARRANT]


 


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


 


AIR
INDUSTRIES GROUP


 


Warrant
To Purchase Common Stock


 


Warrant No.: ______


 


Number of Shares of Common Stock:____________


 


Date of Issuance: May [___], 2017 ("Issuance Date")


 


Air Industries Group,
a Nevada corporation (the "Company"), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [BUYER], the registered holder
hereof or its permitted assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or after the Issuance Date,
but not after 11:59 p.m., New York time, on the Expiration Date, (as defined below), ______________ (_____________)1
fully paid nonassessable shares of Common Stock, subject to adjustment as provided herein (the "Warrant Shares").
Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase
Common Stock issued in exchange, transfer or replacement hereof, this "Warrant"), shall have the meanings set
forth in Section 17. This Warrant is one of the Warrants to purchase Common Stock (the "SPA Warrants") issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of May [  ], 2017 (the "Subscription
Date"), by and among the Company and the investors (the "Buyers") referred to therein (the "Securities
Purchase Agreement"). Capitalized terms used herein and not otherwise defined shall have the definitions ascribed to
such terms in the Securities Purchase Agreement.


 


1
Insert 30% of the number of shares of Common Stock issuable to the Holder on the Closing Date upon conversion of the Notes
(as defined in the Securities Purchase Agreement) (without regard to any limitation on conversion set forth therein) purchased
by the Holder pursuant to the Securities Purchase Agreement.


 






    


    


    

 


1.    EXERCISE OF WARRANT.


 


(a)  
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations
set forth in Section 1(f)), this Warrant may be exercised by the Holder at any time or times on or after the Issuance Date, in
whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the "Exercise
Notice"), of the Holder's election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal
to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate
Exercise Price") in cash by wire transfer of immediately available funds or (B) if the provisions of Section 1(d) are
applicable, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section
1(d)). No ink-original Exercise Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Exercise Notice be required. The Holder shall not be required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same
effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the first (1st) Trading Day following the date on which the Holder has delivered an
Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Notice to
the Holder and the Company's transfer agent (the "Transfer Agent"). On or before the earlier of (i) third (3rd)
Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period, in each case, following the date on
which the Holder has delivered the Exercise Notice, so long as the Holder delivers the Aggregate Exercise Price (or notice of a
Cashless Exercise) on or prior to the first (1st) Trading Day following the date on which the Holder has delivered the
Exercise Notice (a "Share Delivery Date") (provided that if the Aggregate Exercise Price has not been delivered
by such date, the applicable Share Delivery Date shall be one (1) Trading Day after the Aggregate Exercise Price (or notice of
a Cashless Exercise) is delivered), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of Warrant Shares to
which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit
/ Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered
in the Company's share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder
is entitled pursuant to such exercise. The Company shall be responsible for all fees and expenses of the Transfer Agent and all
fees and expenses with respect to the issuance of Warrant Shares via DTC, if any. Upon delivery of the Exercise Notice, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder's DTC account or the date of
delivery of the certificates evidencing such Warrant Shares, as the case may be. If this Warrant is submitted in connection with
any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and
in no event later than three (3) Trading Days after any exercise and at its own expense, issue a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the number of Warrant Shares issuable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional Warrant Shares are
to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded up to the
nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant. The Company's obligations to issue and deliver Warrant Shares in accordance with
the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination.


 






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(b)  
Exercise Price. For purposes of this Warrant, "Exercise Price" means the lesser of the (i) closing
price on Friday May 12, 2017, and (ii) the Weighted Average Price of the Common Stock for the five trading days ending Thursday
May 11, 2017.


 


(c)  
Company's Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue
to the Holder on or prior to the applicable Share Delivery Date either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, a certificate for the number of shares of Common Stock to which the Holder is entitled
and register such shares of Common Stock on the Company's share register or if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the Holder's balance account with DTC, for such number of shares of Common Stock
to which the Holder is entitled upon the Holder's exercise of this Warrant or (II) if a registration statement covering the resale
of the Warrant Shares that are the subject of the Exercise Notice (the "Unavailable Warrant Shares") is not available
for the resale of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit / Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a "Notice
Failure" and together with the event described in clause (I) above, an "Exercise Failure"), then, in
addition to all other remedies available to the Holder, the Holder, upon written notice to the Company, may retain or have returned,
as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice. In addition to the
foregoing, if on or prior to the applicable Share Delivery Date either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver a certificate to the Holder and register
such shares of Common Stock on the Company's share register or, if the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, credit the Holder's balance account with DTC for the number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise hereunder or pursuant to the Company's obligation pursuant to clause (ii) below or
(II) a Notice Failure occurs, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise
that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3)
Trading Days after the Holder's request promptly honor its obligation to deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit such Holder's balance account with DTC, as applicable, and pay cash to the Holder in an amount
equal to the excess (if any) of the Holder’s total purchase price (including brokerage commissions and other out of pocket
expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”) over the product of (A) such number
of shares of Common Stock, times (B) the price at which the sell order giving rise to such purchase obligation was executed. Nothing
shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates
representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant
as required pursuant to the terms hereof.


 






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(d)  
Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering
the resale of the Unavailable Warrant Shares is not available for the resale of such Unavailable Warrant Shares, the Holder may,
in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the "Net Number" of shares of Common Stock determined according to the following formula (a "Cashless Exercise"):


 


Net Number
= (A x B) - (A x C)


       B


 


For purposes
of the foregoing formula:


 


A=
the total number of shares with respect to which this Warrant is then being exercised.


 


B=
as applicable: (i) the Weighted Average Price of the Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not
a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of "regular
trading hours" (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading
Day, (ii) the Closing Bid Price of the Common Stock on the principal trading market as reported by Bloomberg as of the time of
the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is executed during "regular trading
hours" on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof or (iii) the Weighted
Average Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading
Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of "regular trading
hours" on such Trading Day.


 






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C=
the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.


 


For purposes of Rule
144(d) promulgated under the 1933 Act, as in effect on the date hereof, the Company hereby acknowledges and agrees that the Warrant
Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant
Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.


 


(e)  
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 12.


 


(f)   
Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Company shall not effect
the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant
to the terms and conditions of this Warrant and any such exercise shall be null and void and treated as if never made, to the extent
that after giving effect to such exercise, the Holder together with the other Attribution Parties collectively would beneficially
own in excess of 4.99% (the "Maximum Percentage") of the number of shares of Common Stock outstanding immediately
after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including,
without limitation, any convertible notes or convertible preferred stock or warrants, including the other SPA Warrants) beneficially
owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). For purposes of determining
the number of outstanding


 






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shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities
and Exchange Commission (the "SEC"), as the case may be, (y) a more recent public announcement by the Company
or (3) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding
(the "Reported Outstanding Share Number"). If the Company receives an Exercise Notice from the Holder at a time
when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall
(i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise
Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 1(f), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise
Notice (the number of shares by which such purchase is reduced, the "Reduction Shares") and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason
at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day confirm orally and in
writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder
and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number
of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder's and the other Attribution Parties' aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess
Shares") shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote
or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null
and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of
a written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage
not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective
until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease
will apply only to the Holder and the other Attribution Parties and not to any other holder of SPA Warrants that is not an Attribution
Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess
of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall
have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 1(f) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective
or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f) or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.


 






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(g)  
Insufficient Authorized Shares. If at any time while this Warrant remains outstanding the Company does not have a
sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise
of this Warrant at least a number of shares of Common Stock equal to the number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of all of this Warrant then outstanding (the "Required Reserve Amount"
and the failure to have such sufficient number of authorized and unreserved shares of Common Stock, an "Authorized Share
Failure"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than seventy-five (75) days after the occurrence of such Authorized Share Failure, the Company
shall hold a meeting of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In
connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its best efforts
to solicit its shareholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the shareholders that they approve such proposal. Notwithstanding the foregoing, if any such time of an Authorized
Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding Common
Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining
such consent and submitting for filing with the SEC an Information Statement on Schedule 14C. In the event that upon any exercise
of this Warrant, the Company does not have sufficient authorized shares to deliver in satisfaction of such exercise, then unless
the Holder elects to void such attempted exercise, the Holder may require the Company to pay to the Holder within three (3) Trading
Days of the applicable exercise, cash in an amount equal to the product of (i) the quotient determined by dividing (x) the number
of Warrant Shares that the Company is unable to deliver pursuant to this Section 1(g), by (y) the total number of Warrant Shares
issuable upon exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant) and (ii)
the Black Scholes Value; provided, that (x) references to "the day immediately following the public announcement of the applicable
Fundamental Transaction" in the definition of "Black Scholes Value" shall instead refer to "the date the Holder
exercises this Warrant and the Company cannot deliver the required number of Warrant Shares because of an Authorized Share Failure"
and (y) clause (iii) of the definition of "Black Scholes Value" shall instead refer to "the underlying price per
share used in such calculation shall be the highest Weighted Average Price during the period beginning on the date of the applicable
date of exercise and the date that the Company makes the applicable cash payment."


 


2.    ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of Warrant Shares shall be adjusted from
time to time as follows:


 


(a)  
Adjustment Upon Subdivision or Combination of Shares of Common Stock. If the Company at any time on or after the
Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or
after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will
be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(a)
shall become effective at the close of business on the date the subdivision or combination becomes effective.


 






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(b)  
Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant, with the prior written
consent of the Required Holders, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate
by the Board of Directors of the Company.


 


(c)  
Reset. On the earlier to occur of (i) the consummation by the Company of an offering of Common Stock pursuant to
the Company's Registration Statement No. 333-217582 provided that such offering results in gross process to the Company of at least
$3,000,000 and (ii) the first date on which no Notes are outstanding, the Exercise Price then in effect shall be reset to equal
the lower of (x) the Exercise Price then in effect and (y) if the trigger of the reset of the Exercise Price pursuant to this Section
2(c) is (A) the immediately preceding clause (i), the lowest price at which the Company offers shares of Common Stock pursuant
to such registration statement and (B) the immediately preceding clause (ii), the Weighted Average Price of the Common Stock on
such first date on which no Notes are outstanding.


 


3.    RIGHTS
UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the
extent that the Holder's right to participate in any such Distribution would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and
shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until
such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no
such limitation).


 






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4.    PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.


 


(a)    Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders
of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held
the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions
on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, that to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of
such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance
for the benefit of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right
granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the
same extent as if there had been no such limitation).


 


(b)    Fundamental
Transactions. The Company shall cause any Successor Entity in a Fundamental Transaction in which the Company is not the survivor
to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required
Holders, including agreements, if so requested by the Required Holders, to deliver to each holder of the SPA Warrants in exchange
for such SPA Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected
by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent
to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders, and with
an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the occurrence or consummation of such Fundamental Transaction). No later than (i)
thirty (30) days prior to the occurrence or consummation of any Fundamental Transaction or (ii) if later, the first Trading Day
following the date the Company first becomes aware of the occurrence or potential occurrence of a Fundamental Transaction, the
Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder. Upon the occurrence
or consummation of any Fundamental Transaction, , the Company and the Successor Entity or Successor Entities, jointly and severally,
shall succeed to, and the Company shall cause


 






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any
Successor Entity or Successor Entities to jointly and severally succeed to, and be added to the term "Company" under
this Warrant (so that from and after the date of such Fundamental Transaction, each and every provision of this Warrant referring
to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly
and severally), and the Company and the Successor Entity or Successor Entities, jointly and severally, may exercise every right
and power of the Company prior thereto and shall assume all of the obligations of the Company prior thereto under this Warrant
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named
as the Company in this Warrant, and, solely at the request of the Holder, if the Successor Entity and/or Successor Entities is
a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market, shall deliver (in addition
to and without limiting any right under this Warrant) to the Holder in exchange for this Warrant a security of the Successor Entity
and/or Successor Entities evidenced by a written instrument substantially similar in form and substance to this Warrant and exercisable
for a corresponding number of shares of capital stock of the Successor Entity and/or Successor Entities (the "Successor
Capital Stock") equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction (such corresponding number of
shares of Successor Capital Stock to be delivered to the Holder shall be equal to the greater of (A) the quotient of (i) the aggregate
dollar value of all consideration (including cash consideration and any consideration other than cash ("Non-Cash Consideration"),
in such Fundamental Transaction, as such values are set forth in any definitive agreement for the Fundamental Transaction that
has been executed at the time of the first public announcement of the Fundamental Transaction or, if no such value is determinable
from such definitive agreement, as determined in accordance with Section 12 with the term "Non-Cash Consideration" being
substituted for the term "Exercise Price") that the Holder would have been entitled to receive upon the happening of
such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental
Transaction, had this Warrant been exercised immediately prior to such Fundamental Transaction or the record, eligibility or other
determination date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise
of this Warrant) (the "Aggregate Consideration") divided by (ii) the per share Closing Sale Price of such Successor
Capital Stock on the Trading Day immediately prior to the consummation or occurrence of the Fundamental Transaction and (B) the
product of (i) the quotient obtained by dividing (x) the Aggregate Consideration, by (y) the Closing Sale Price of the Common
Stock on the Trading Day immediately prior to the consummation or occurrence of the Fundamental Transaction and (ii) the highest
exchange ratio pursuant to which any shareholder of the Company may exchange Common Stock for Successor Capital Stock) (provided,
however, to the extent that the Holder's right to receive any such shares of publicly traded common stock (or their equivalent)
of the Successor Entity would result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, if applicable,
then the Holder shall not be entitled to receive such shares to such extent (and shall not be entitled to beneficial ownership
of such shares of publicly traded common stock (or their equivalent) of the Successor Entity as a result of such consideration
to such extent) and the portion of such shares shall be held in abeyance for the Holder until such time or times, as its right
thereto would not result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, at which time or times
the Holder shall be delivered such shares to the extent as if there had been no such limitation), and such security shall be satisfactory
to the Holder, and with an identical exercise price to the Exercise Price hereunder (such adjustments to the number of shares
of capital stock and such exercise price being for the purpose of protecting after the consummation or occurrence of such Fundamental
Transaction the economic value of this Warrant that was in effect immediately prior to the consummation or occurrence of such
Fundamental Transaction, as elected by the Holder solely at its option). Upon occurrence or consummation of the Fundamental Transaction,
the Company and the Successor Entity or


 






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Successor Entities shall deliver to the Holder confirmation that there shall be issued
upon exercise of this Warrant at any time after the occurrence or consummation of the Fundamental Transaction, as elected by the
Holder solely at its option, shares of Common Stock, Successor Capital Stock or, in lieu of the shares of Common Stock or Successor
Capital Stock (or other securities, cash, assets or other property purchasable upon the exercise of this Warrant prior to such
Fundamental Transaction), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights), which for purposes of clarification may continue to be shares of Common Stock, if any,
that the Holder would have been entitled to receive upon the happening of such Fundamental Transaction or the record, eligibility
or other determination date for the event resulting in such Fundamental Transaction, had this Warrant been exercised immediately
prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions
of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the occurrence or consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities, cash, assets
or other property with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company
shall make appropriate provision to insure that, and any applicable Successor Entity or Successor Entities shall ensure that,
the Holder will thereafter have the right to receive upon exercise of this Warrant at any time after the occurrence or consummation
of the Corporate Event, shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares
of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such
Corporate Event (but not in lieu of such items still issuable under Sections 3 and 4(a), which shall continue to be receivable
on the Common Stock or on the such shares of stock, securities, cash, assets or any other property otherwise receivable with respect
to or in exchange for shares of Common Stock), such shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights and any shares of Common Stock) which the Holder would have been
entitled to receive upon the occurrence or consummation of such Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event, had this Warrant been exercised immediately prior to such Corporate Event
or the record, eligibility or other determination date for the event resulting in such Corporate Event (without regard to any
limitations on exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably
satisfactory to the Holder. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events.


 






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5.    NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles
of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 of this Warrant, and will at all times in good faith carry out all of the provisions of this Warrant and take all action
as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall
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, (ii) shall 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, and (iii) shall, so long
as any of the SPA Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise of the SPA Warrants then outstanding (without regard to any limitations
on exercise).


 


6.    WARRANT
HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's
capacity as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices
and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.


 


7.    REISSUANCE
OF WARRANTS.


 


(a)    Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.


 






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(b)  
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the Warrant Shares then underlying this Warrant.


 


(c)  
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided,
however, that no SPA Warrants for fractional Warrant Shares shall be given.


 


(d)  
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock
underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying
this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.


 


8.    NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment
of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least
fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided in each case that such
information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder. It is
expressly understood and agreed that the time of exercise specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company.


 






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9.    AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended or waived
and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only
if the Company has obtained the written consent of the Required Holders. Any change, amendment or waiver by the Company and the
Required Holders shall be binding on the Holder of this Warrant and all holders of the other SPA Warrants.


 


10. GOVERNING LAW; JURISDICTION; JURY TRIAL. This Warrant shall be governed by and construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed
by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The
Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address set forth in Section 9(f) of the Securities Purchase Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and all the Buyers and
shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference
and shall not form part of, or affect the interpretation of, this Warrant.


 


12. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation
of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile or electronic
mail within one (1) Business Day of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.
If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant
Shares within one (1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then
the Company shall, within one (1) Business Day submit via facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Holder and approved by the Company, such approval not to be unreasonably
withheld, conditioned or delayed or (b) the disputed arithmetic calculation of the Warrant Shares to an independent, outside accountant,
selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or delayed. The
Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than five (5) Business Days from the time it receives
the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case
may be, shall be binding upon all parties absent demonstrable error.


 






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13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue
actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may
be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant
shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity
of showing economic loss and without any bond or other security being required.


 


14. TRANSFER.This Warrant and the Warrant Shares may be offered for sale, sold, transferred, pledged or assigned
without the consent of the Company, except as may otherwise be required by Section 2(f) of the Securities Purchase Agreement.


 


15. SEVERABILITY.If
any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 


16. DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Warrant, unless the Company has in
good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose
such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to
such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company
or its Subsidiaries.


 






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17. 
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:


 


(a)  
"1933 Act" means the Securities Act of 1933, as amended.


 


(b)  
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it being understood for purposes of this definition that "control"
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.


 


(c)  
"Attribution Parties" means, collectively, the following Persons and entities, which the Holder shall identify
in writing to the Company on the Closing Date and from time to time thereafter, together with the number of shares of Common Stock
beneficially owned: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time
to time after the Issuance Date, directly or indirectly managed or advised by the Holder's investment manager or any of its Affiliates
or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could
be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial
ownership of the Company's Common Stock would or could be aggregated with the Holder's and the other Attribution Parties for purposes
of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other
Attribution Parties to the Maximum Percentage.


 


(d)  
"Black Scholes Value" means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained
from the "OV" function on Bloomberg determined as of the day immediately following the public announcement of the applicable
Fundamental Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is
consummated, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of this Warrant as of such date of request, (ii) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg as of the day immediately following the public announcement
of the applicable Fundamental Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental
Transaction is consummated, (iii) the greater of (x) Closing Sale Price of the Common Stock as of the day the applicable Fundamental
Transaction is publicly announced, or, if the Fundamental Transaction is not publicly announced, the date immediately preceding
the date the Fundamental Transaction is consummated and (y) the underlying price per share used in such calculation shall be the
sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in
the Fundamental Transaction, (iv) a zero cost of borrow and (v) a 360 day annualization factor.


 






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(e)   
"Bloomberg" means Bloomberg Financial Markets.


 


(f)  
"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.


 


(g)  
"Closing Bid Price" and "Closing Sale Price" means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg,
or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security
as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing
Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation
period.


 


(h)  
"Common Stock" means (i) the Company's shares of Common Stock, par value $0.001 per share, and (ii) any
share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such
Common Stock.


 


(i)  
"Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.


 


(j)  
 "Designee" means Empery Asset Management, LP.


 


(k) 
"Eligible Market" means the Principal Market, The NASDAQ Global Market, The NASDAQ Global Select Market,
The NASDAQ Capital Market or The New York Stock Exchange, Inc.


 






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(l)    "Expiration
Date" means the date sixty (60) months after the Issuance Date or, if such date falls on a day other than a Business
Day or on which trading does not take place on the Principal Market (a "Holiday"), the next day that is not a
Holiday.


 


(m) "Fundamental
Transaction" means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X) to one
or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or
have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares
of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with
any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares
of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such
purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject
Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares
of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by
all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement
or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities
become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares
of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly,
including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually
or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction
in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x)
at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of
the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z)
a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction
requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the
Company or (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions,
the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents,
the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 






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(n)   
"Group" means a "group" as that term is used in Section 13(d) of the 1934 Act and as defined
in Rule 13d-5 thereunder.


 


(o)  
"Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.


 


(p)   
"Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person,
including such entity whose common capital or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected
by the Required Holders, any other market, exchange or quotation system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Required Holders or in the absence of such designation, such Person or entity with
the largest public market capitalization as of the date of consummation of the Fundamental Transaction.


 


(q)  
"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.


 


(r)   
"Principal Market" means the NYSE MKT LLC.


 


(s)   
"Required Holders" means the holders of the SPA Warrants representing at least a majority of the shares
of Common Stock underlying the SPA Warrants then outstanding and shall include the Designee so long as the Designee or any of its
Affiliates holds any SPA Warrants.


 


(t)    
"Standard Settlement Period" means the standard settlement period, expressed in a number of Trading Days,
on the Company's primary trading market with respect to the Common Stock as in effect on the date of delivery of the applicable
Exercise Notice.


 


(u)  
"Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.


 


(v)  
"Subsidiary" has the meaning ascribed to such term in the Securities Purchase Agreement.


 


(w) "Successor
Entity" means one or more Person or Persons (or, if so elected by the Required Holders, the Company or Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected by the Required
Holders, the Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.


 






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(x)  
"Trading Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock on such day, then on the principal securities exchange or securities
market on which the Common Stock is then traded.


 


(y)  
"Weighted Average Price" means, for any security as of any date, the dollar volume-weighted average price
for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the
Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its "Volume
at Price" function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other
time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other
time as such market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved pursuant to Section 12 with the term "Weighted Average Price" being
substituted for the term "Exercise Price." All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.


 


[Signature Page Follows]


 






    - 20 -


    


    

 


IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.


 


	 	AIR
INDUSTRIES GROUP


 


By:___________________________


Name:


Title: 








 






    


    


    

 


EXHIBIT A


 


EXERCISE NOTICE


 


TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS


WARRANT TO PURCHASE COMMON STOCK


 


air
industries group 


 


The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("Warrant Shares")
of Air Industries Group, a Nevada corporation (the "Company"), evidenced
by the attached Warrant to Purchase Common Stock (the "Warrant"). Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.


 


1. Form of Exercise
Price. The Holder intends that payment of the Exercise Price shall be made as:


 


____________a
"Cash Exercise" with respect to _________________ Warrant Shares; and/or


 


____________a
"Cashless Exercise" with respect to _______________ Warrant Shares.


 


2. Payment of Exercise
Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance
with the terms of the Warrant.


 


3. Delivery of Warrant
Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.


 


Date: _______________ __, ______


 


_________________________


Name of Registered Holder


 


By:_______________________


       Name: 


       Title:


 






    


    


    

 


ACKNOWLEDGMENT


 


The Company hereby
acknowledges this Exercise Notice and hereby directs Broadridge Investor Communication Solutions Inc. to issue the above indicated
number of shares of Common Stock in accordance with the Transfer Agent Instructions dated May __, 2017 from the Company and acknowledged
and agreed to by Broadridge Investor Communication Solutions Inc.


 





	 	AIR INDUSTRIES
GROUP


 


By:________________________________


Name:


Title: