Exhibit 4.1


 


WARRANT


 


NEITHER THE SECURITIES REPRESENTED HEREBY NOR
THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.


 


DRONE AVIATION HOLDING CORP.


 


WARRANT 


 


	Warrant No. PA-1	Original Issue Date: November [   ], 2015


 


DRONE AVIATION HOLDING
CORP., a Nevada corporation (the “Company”), hereby certifies that, for value received, Dougherty &
Company, LLC or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total
of [________________]1 shares of Common Stock (each
such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at any time and
from time to time from and after the Original Issue Date and through and including November [ ], 2020 (the “Expiration
Date”).


 


1.           Definitions.
As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.


 


“Closing
Price” means, for any date of determination, the price determined by the first of the following clauses that applies:
(i) if the Common Stock is then listed or quoted on a Trading Market (other than the OTC Bulletin Board, OTCQB or OTCQX), the closing
bid price per share of the Common Stock for such date (or the nearest preceding date) on such market; (ii) if prices for the Common
Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest
preceding date) so quoted; (iii) if prices for the Common Stock are then reported in the “Pink Sheets” published by
the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (iv) in all other cases, the fair market value of a share
of Common Stock as determined by an independent qualified appraiser selected in good faith and paid for by the Company.


 


“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any securities into which such common
stock may hereafter be reclassified.


 


“Exercise
Price” means $5.00, subject to adjustment in accordance with Section 9.


 


“Fundamental
Transaction” means any of the following: (i) the Company effects any merger or consolidation of the Company with or into
another person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property.


 


“Original
Issue Date” means the Original Issue Date first set forth on the first page of this Warrant or its predecessor instrument.


 





 






1 7% of the
shares sold in the offering


 






    	 	 



     


    

 


“Trading
Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the (other than the OTC Bulletin
Board, OTCQB or OTCQX)), or (ii) if the Common Stock is not listed on a Trading Market (other than the (other than the OTC Bulletin
Board, OTCQB or OTCQX)), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board or the OTCQB or OTCQX as reported by the OTC Markets Group, or (iii) if the Common Stock is not quoted on any Trading Market,
a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated
(or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in clauses (i), (ii) and (iii) hereof, then Trading Day shall mean any day, other than
a Saturday or Sunday and other than a day that banks in the State of New York are generally authorized or required by applicable
law to be closed.


 


“Trading
Market” means whichever of the New York Stock Exchange, NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market, the OTC Bulletin Board, the OTCQB or the OTCQX (or any successor of the foregoing) on which
the Common Stock is listed or quoted for trading on the date in question.


 


2.           Registration
of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.


 


3.           Registration
of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified
herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a Warrant.


 


4.           Exercise and Duration of Warrants.



 


(a)           This
Warrant shall be exercisable by the registered Holder in whole at any time and in part from time to time from the Original Issue
Date through and including the Expiration Date. At 5:00 p.m., Eastern time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value. The Company may not call or redeem any portion of this Warrant
without the prior written consent of the affected Holder.


 


(b)           Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of
this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates (as defined
under Rule 144, “Affiliates”) and any other persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive
or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event
of a Fundamental Transaction as contemplated in Section 9 of this Warrant. By written notice to the Company, the Holder may waive
the provisions of this Section 4(b) but any such waiver will not be effective until the 61st day after delivery of such notice,
nor will any such waiver effect any other Holder.


 






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Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of
this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any
other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d)
of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall
not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount
of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in
Section 9 of this Warrant. This restriction may not be waived.


 


5.           Delivery of
Warrant Shares. 


 


(a)           To
effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant are being exercised. Upon delivery of the Exercise Notice (in the form attached hereto) to the
Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder and the Company shall promptly (but
in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate
for the Warrant Shares issuable upon such exercise, which, unless otherwise required by applicable law, shall be free of restrictive
legends. A “Date of Exercise” means the date on which the Holder shall have delivered to the Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such Holder
is not utilizing the cashless exercise provisions set forth in this Warrant, payment of the Exercise Price for the number of Warrant
Shares so indicated by the Holder to be purchased.


 


(b)           If
by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.


 


(c)           If
by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, 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 the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of
the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In.


 


(d)           The
Company’s obligations to issue and deliver Warrant Shares in accordance with the terms 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, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation
or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit
a 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 Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.


 






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6.           Charges,
Taxes and Expenses. Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates
for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.


 


7.           Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity
(which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply
with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.
If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant
to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.


 


8.           Reservation of
Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized
but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise
of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.


 


9.           Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time
as set forth in this Section 9.


 


(a)           Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be adjusted to equal the product obtained by multiplying
the then-current Exercise Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.


 


(b)           Fundamental
Transactions. If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have
the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate
Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions
and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise
thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.


 






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(c)           Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.


 


(d)           Calculations.
All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.


 


(e)           Notice
of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise
of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon
which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the
Holder and to the Company’s transfer agent.


 


10.         Payment of Exercise
Price. The Holder may pay the Exercise Price in one of the following manners:


 


(a)           Cash Exercise.
The Holder may deliver immediately available funds; or


 


(b)           Cashless Exercise.
The Holder may notify the Company in an Exercise Notice of its election to utilize a cashless exercise, in which event the Company
shall issue to the Holder the number of Warrant Shares determined as follows:


 


X = Y [(A-B)/A]


 


where:


 


X = the
number of Warrant Shares to be issued to the Holder.


 


Y = the number
of Warrant Shares with respect to which this Warrant is being exercised.


 


A = the average
of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.


 


B = the Exercise
Price.


 


For purposes of Rule 144 promulgated under
the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction
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.


 


11.         No Fractional
Shares. No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied
by the Closing Price of one Warrant Share on the date of exercise.


 






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12.         Notices.
Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective if provided:


 


if to the Placement Agent, shall be delivered
or sent by mail or e-mail transmission as follows:


 


Dougherty & Company, LLC

90 South Seventh Street, Suite 4300

Minneapolis, MN 55402

Attention: Robert Schnell


 


with a copy (which shall not constitute notice) to: 


 


Faegre Baker Daniels LLP

2200 Wells Fargo Center

Minneapolis, MN 55402-3901

Attention: Jonathan R. Zimmerman


 


if to the Company shall be delivered or sent by mail or
e-mail transmission to:


 


Drone Aviation Holding Corp.

11651 Central Parkway

Jacksonville, FL 32224

Attention: Chief Executive Officer


 


with a copy (which shall not constitute notice) to:


 


Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, NY 10006

Attention: Harvey Kesner


 


Any such statements, requests, notices or agreements
shall be effective only upon receipt. Any party to this Warrant may change such address for notices by sending to the parties to
this Warrant written notice of a new address for such purpose.


 


In case any time: (1) the Company shall declare
any cash dividend on its capital stock; (2) the Company shall pay any dividend payable in stock upon its capital stock or make
any distribution to the holders of its capital stock; (3) the Company shall offer for subscription pro rata to the holders of its
capital stock any additional shares of stock of any class or other rights; (4) there shall be any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its
assets to, another corporation; or (5) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company; then, in any one or more of said cases, the Company shall give prompt written notice to the Holder. Such notice shall
also specify the date as of which the holders of capital stock of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their capital stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or conversion or redemption, as the case
may be. Such written notice shall be given at least 20 days prior to the action in question and not less than 20 days prior to
the record date or the date on which the Company’s transfer books are closed in respect thereto.


 


13.         Lock Up.
In accordance with FINRA Rule 5110(g), this Warrant shall not be sold, transferred, assigned, pledged, or hypothecated, or be the
subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition
of this Warrant or the Warrant Shares, by any person for a period of 180 days immediately following the Original Issue Date, except
as provided in paragraph (g)(2) of FINRA Rule 5110.


 


14.         Registration
Rights.


 


(a)           Registration
Under the Securities Act of 1933. As of the date hereof, none of the Warrants or the Warrant Shares have been registered for
purposes of public resale or distribution under the Securities Act.


 


(b)           Registrable Securities.
As used herein, the term “Registrable Security” means the Warrant Shares and any shares of Common Stock issued
upon any stock split or stock dividend in respect of such Warrant Shares; provided, however, that with respect to
any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination,
(i) it has been registered under the Securities Act and disposed of pursuant thereto, (ii) registration under the Securities
Act is no longer required for the Holder for subsequent public distribution of such security without regard to volume restrictions
under Rule 144 (including Rule 144(a)) promulgated under the Securities Act or otherwise, or (iii) it has ceased
to be outstanding. The term “Registrable Securities” means any and/or all of the securities falling within the
foregoing definition of a “Registrable Security.” In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition
of Registrable Security as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this
Section.


 






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(c)          Piggyback Registration.
If, prior to the Expiration Date, the Company proposes to prepare and file a registration statement or post-effective amendments
thereto covering the resale of shares of Common Stock held by stockholders of the Company (in any such case, other than in connection
with an underwritten public offering, registered direct offering in which the Company has engaged a placement agent, merger, acquisition,
pursuant to Form S-8 or Form S-4 or their respective successor forms, or on any form which does not include substantially
the same information as would be required to be included in a registration statement covering the sale of Registrable Securities)
(for purposes of this Section, collectively, the “Registration Statement”), it will give written notice of its
intention to do so (“Notice”), at least 30 days prior to the filing of each such Registration Statement,
to all Holders of the Registrable Securities. Upon the written request of such a Holder (a “Requesting Holder”),
made within 10 days after the Notice is given, that the Company include any of the Requesting Holder’s Registrable Securities
in the proposed Registration Statement, the Company shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which it has been so requested to register (“Piggyback Registration”),
at the Company's sole cost and expense and at no cost or expense to the Requesting Holders (except as provided below).


 


Notwithstanding the provisions of
this Section, the Company shall have the right at any time after it shall have given written notice pursuant to this Section (irrespective
of whether any written request for inclusion of Registrable Securities shall have already been made) to elect not to file any such
proposed Registration Statement, or to withdraw the same after the filing but prior to the effective date thereof, without incurring
any liability to any holder of Registrable Securities.


 


(d)          Covenants With Respect
to Registration. In connection with any registration of Registrable Securities pursuant to this Agreement, the parties agree
that:


 


(i)           With respect to each inclusion
of securities in a Registration Statement pursuant to the Section, the Company shall bear the following fees, costs, and expenses:
all registration, filing and FINRA fees, printing expenses, fees and disbursements of counsel and accountants for the Company,
, all internal expenses, the premiums and other costs of policies of insurance against liability arising out of the public offering,
and legal fees and disbursements and other expenses of complying with state securities laws of any jurisdictions in which the securities
to be offered are to be registered or qualified. Fees and disbursements of special counsel and accountants for the selling Holders,
underwriting discounts and commissions, and transfer taxes for selling Holders and any other expenses incurred by the selling Holders
and relating to the sale of securities by the selling Holders not expressly included above shall be borne by the selling Holders.


 


(ii)           The Company shall take
or cause to be taken all necessary action to qualify the Registrable Securities for sale under the securities laws of such jurisdictions
of the United States as the Holders reasonably designate and to continue such qualifications in effect so long as required for
the distribution of the Registrable Securities, except that the Company shall not be required in connection therewith to qualify
as a foreign corporation, to subject itself to taxation in any jurisdiction, or to execute a general consent to service of process
in any jurisdiction.


 


(iii)           The Company shall indemnify
any Holder of the Registrable Securities to be sold pursuant to any Registration Statement and each person, if any, who controls
such Holder , against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Securities Exchange
Act of 1934, as amended (“Exchange Act”)or otherwise, arising from such registration statement to the same extent
and with the same effect as the provisions pursuant to which the Company has agreed to indemnify Dougherty & Company, LLC as
set forth in the placement agent engagement letter dated September 11, 2015 (the “Engagement Letter”) and to
provide for just and equitable contribution as set forth in the placement agent Engagement Letter, except to such extent that such
losses, claims, damages, expenses or liabilities occur as a result of information provided to the Company by or on behalf of such
Holder or as a result of such Holder’s gross negligence or willful misconduct.


 






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(iv)           The Holders of Registrable
Securities to be sold pursuant to a registration statement, and such Holder’s successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to
which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from information furnished
by or on behalf of such Holder, or such Holder’s successors or assigns, for specific inclusion in such Registration Statement
to the same extent and with the same effect as the provisions pursuant to which the placement agent have agreed to indemnify the
Company as set forth in the Engagement Letter and to provide for just and equitable contribution as set forth in the Engagement
Letter.


 


(v)           Nothing contained in this
Agreement shall be construed as requiring any Holder to exercise the Warrants held by such Holder prior to the initial filing of
any Registration Statement or the effectiveness thereof.


 


(vi)           If the Company shall
fail to comply with the provisions of this Section, the Company shall, in addition to any other equitable or other relief available
to the Holders of Registrable Securities, be liable for any or all consequential damages sustained by the Holders of Registrable
Securities requesting registration of their Registrable Securities; provided, however, that the Holders of Registrable
Securities shall not be entitled to any special or punitive damages with respect to any such failure on behalf of the Company.


 


(vii)          The Company shall promptly
deliver copies of all correspondence between the Commission and the Company, its counsel or its auditors with respect to the Registration
Statement to each Holder of Registrable Securities included for registration in such Registration Statement pursuant to this Section
requesting (in writing) such correspondence and shall permit each Holder of Registrable Securities to do such reasonable investigation,
upon reasonable advance notice, with respect to information contained in or omitted from the Registration Statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the FINRA. Such investigation shall include access to
books, records and properties and opportunities necessary or helpful to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent, at such reasonable times, upon such reasonable notice and as often as any
such Holder of Registrable Securities shall reasonably request; provided, that the Company may require each such Holder to enter
into reasonable confidentiality and non-disclosure agreements with respect to the information contained in or derived from such
investigations.


 


15.         Miscellaneous.



 


(a)          This Warrant
shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any person other than the Company and the Holder any
legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.


 


(b)          All questions
concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts
of law thereof. The Holder agrees, on behalf of itself and its representatives, to submit to the jurisdiction of any court of competent
jurisdiction located in the State of Minnesota, County of Hennepin,2
to resolve any dispute relating to this agreement and waive any right to move to dismiss or transfer any such action brought in
any such court on the basis of any objection to personal jurisdiction or venue.


 





 






2 This matches
the engagement letter.


 






    	 	8	 



     


    

 


(c)           The headings
herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.


 


(d)           In case any
one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will
attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this Warrant.


 


(e)           Prior to
exercise of this Warrant, the Holder hereof shall not, by reason of by being a Holder, be entitled to any rights of a stockholder
with respect to the Warrant Shares.


 


[Remainder of page intentionally left
blank, signature page follows] 


 




    	 	9	 



     


    


 


In witness whereof, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.


 


	 	DRONE AVIATION HOLDING CORP.
	 	 
	 	By:	 
	 	Name:	 
	 	Its:	 


 


Accepted and agreed:


 


DOUGHERTY & COMPANY,
LLC


 


	By:	 	 
	Name:	 Robert Schnell	 
	Its:	 Managing Director	 


 




    	 	 



     


    


 


EXERCISE NOTICE


 


The undersigned
Holder hereby irrevocably elects to purchase _________ shares of Common Stock pursuant to the attached Warrant.
Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.


 


(1) The undersigned Holder hereby exercises
its right to purchase _________ Warrant Shares pursuant to the Warrant.


 


(2) The Holder intends that payment of the
Exercise Price shall be made as (check one):


 


_____                    “Cash Exercise” under
Section 10


 


_____                    “Cashless Exercise” under
Section 10


 


(3) If the Holder has elected a Cash Exercise,
the Holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.


 


(4) Pursuant to this Exercise Notice, the Company
shall deliver to the Holder ____________ Warrant Shares in accordance with the terms of the Warrant.


 


	Dated ______________ __, _____	Name of Holder: 
	 	 
	 	(Print)
	 	 
	 	 
	 	 	 
	 	By:	 
	 	Its:	 
	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)


 




    	 	 



     


    


 


Warrant Shares Exercise Log


 


	Date	 	Number of Warrant
 Shares Available
 to be Exercised	 	Number of Warrant
 Shares Exercised	 	Number of Warrant
 Shares Remaining
 to be Exercised
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 



 




    	 	 



     


    


 


FORM OF ASSIGNMENT


 


[To be completed and signed
only upon transfer of Warrant]


 


FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto the right represented by the attached Warrant to purchase
________ shares of Common Stock to which such Warrant relates and appoints ________ attorney to transfer said right on the
books of the Company with full power of substitution in the premises.


 


Dated: __________ __, _______


 


	 	 
	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
	 	 
	 	Address of Transferee
	 	 
	 	 
	 	 
	 	 
	 	Note: Address for Delivery may not be a P.O. box and must be a physical address where stock certificates may be delivered in connection with this purchase or any future stock issued through splits, warrant conversions or other circumstances. The delivery address may be a personal residence, or a broker dealer where the certificate would be deposited


 


	Attest: